Total cost of financial sector cleanup could hit GH¢18bn by end of year

The total cost of the financial sector cleanup could hit GH¢18 billion by the end of this year.

This amount is based on JoyBusiness’ calculation with regards to the amount spent so far since the exercise started and the GH¢3 billion that the Finance Minister Ken Ofori-Atta has projected to spend in cleaning up the Savings and Loans sector.

According to Mr Ofori-Atta about GH¢14 billion has been spent so far in cleaning up the banking sector.

Earlier this month, the Finance Ministry released about a GH¢1 billion to help clean up the microfinance and rural banks in the country.


The Bank of Ghana in 2017 began a series of activities and measures to clean up the banking sector.

This resulted in the Bank of Ghana closing down some banks that are facing serious liquidity issues and the ones described as insolvent.

Some of the banks that were liquidated included UT Bank, Capital and the BoG agreed with GCB to take on the good assets of the banks, while receivers - Eric Nipa and Vish Ashiagbor of Price Water House Coopers were appointed to manage the liquidation of these institutions.

The Regulator later liquidated five banks, namely; UNIBANK, Royal Bank, Beige Bank, Sovereign Bank and Construction Bank.

The Central Bank later went on to create a new Bank – Consolidated Bank by merging the good assets of these institutions.

BoG on the rationale behind the cleanup

The Bank of Ghana has taken the above measures as part of its efforts to address legacy problems in the banking sector and to restore the stability and resilience of the financial system.

While some of the weaknesses in the sector were attributable to macroeconomic factors, a trend of poor corporate governance, poor risk management practices, related party transactions that were not above board, regulatory non-compliance, and poor supervision (questionable licensing processes and weak enforcement) had emerged over the years, leading to a significant build-up of vulnerabilities in the sector.

Finance Minister on the planned exercise

According to Mr Ofori-Atta, even though the exercise is needed, he is worried about the impact of this action on the informal sector.

He is, therefore, making a passionate appeal to the Bank of Ghana to be tactful with their approach, “the exercise would come with some shocks, but it is needed to help bring about the required confidence in the entire financial sector.”

Asked whether he is worried about the rising cost and the political implication of the exercise? The Finance Minister noted that he believes the exercise has been carried out in a way that they would be vindicated at the end of the whole of exercise, adding that they are cautious about the impact of this exercise on the country’s total debt stock.

Data from the Bank of Ghana shows confidence in the banking sector has picked up.

This is based on data covering the deposits mobilized by the banks in the country for the first quarter of this year as well as loan growth and liquidity.