A Professor of Financial Economics at the University of Ghana Business School has questioned the collapse of UniBank, saying the fundamental principles of banking were disregarded during the financial sector clean-up. <\/p>\n
Professor Lord Mensah, speaking on JoyNews\u2019 PM Express on Wednesday, July 30, insisted that the decisions taken at the time did not reflect sound banking practice.<\/p>\n
\u201cIn banking, there\u2019s what we call minimising the loss and then maximising the recovery. And for me, this is a principle that\u2019s a baseline for banking activities, be it at the central bank level or the lower bank level,\u201d he said. <\/p>\n
\u201cSo for me, these principles were not applied\u2026when we had the banking crisis.\u201d<\/p>\n
He cited the widely accepted notion of \u201ctoo big to fail\u201d and explained that banks don\u2019t exist in isolation. <\/p>\n
\u201cThe existence of a bank takes several dimensions\u2026 You\u2019re looking at government interest in there. You\u2019re looking at employees\u2019 interest. You\u2019re looking at owners\u2019 interest in the bank,\u201d he argued. <\/p>\n
\u201cSo if a bank is about to collapse, you don\u2019t look at just the owner\u2019s perspective alone and say that the owners are not able to meet certain financial obligations\u2026You have to look at what the government is getting from the bank.\u201d<\/p>\n
He pointed out that banks were contributing corporate tax between 25% – 30% at the time, and that many families depended on these institutions for their livelihoods. <\/p>\n
\u201cPeople who are working and able to put food on the table for their kids\u2026 they\u2019ve been able to manage their homes, put their kids to certain levels of education,\u201d he said. <\/p>\n
\u201cSo if you collapse the bank as a result of pushing for the interest of the government, you end up sacrificing employees and at the same time, the state.\u201d<\/p>\n
Prof. Mensah noted that UniBank was reportedly owing GH\u00a24.97 billion, but had offered GH\u00a22 billion in recovery. <\/p>\n
\u201cYou have to take it,\u201d he said. \u201cBecause in banking, as I mentioned earlier, you think about recovery, and then you minimise the possible losses.\u201d<\/p>\n
He described the entire clean-up process as one that neglected core principles of the banking system. <\/p>\n
\u201cYou come to realise that the principles of banking were not followed at the time\u2026 we were cleaning up the banking sector.\u201d<\/p>\n
He referenced fellow panellist and legal practitioner Martin Kpebu, saying, \u201cThat is where my good friend Martin Kpebu will say that the motive was more of witch hunting than following banking principles.\u201d<\/p>\n
Prof. Mensah questioned the rationale behind ignoring recovery opportunities and instead transferring full financial burdens to taxpayers. <\/p>\n
\u201cYou\u2019re talking about recovering GH\u00a22 billion\u2026 So why do you collapse the bank and then transfer all the possible obligations to the taxpayer to the point where the taxpayer had to commit about GH\u00a221 billion and over for the banking sector clean-up when you can retrieve, or you can recover some part of this money from the banks that were collapsing?\u201d<\/p>\n
He concluded, \u201cFrom where I sit, it has to do with the basic principles of banking, which\u2026 was not applied in the entire banking clean-up.\u201d<\/p>\n
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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.<\/p>\n","protected":false},"excerpt":{"rendered":"A Professor of Financial Economics at the University of Ghana Business School has questioned the collapse of UniBank,…\n","protected":false},"author":2,"featured_media":35501,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":["post-35500","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/35500","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=35500"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/35500\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/35501"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=35500"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=35500"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=35500"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}