The Member of Parliament (MP) for Bawku Central Constituency, has written to the Governor of Bank of Ghana, Dr Ernest Addison, to stop the illegal expropriation of the property rights of owners of Domestic Private Banks, who are said to be sweating profusely but can’t speak out for fear of victimization by the Akufo-Addo government.
Mahama Ayariga, believes that the banks will face capitalization and liquidity problems given that they will not receive timely and appropriate coupon payments from their bondholder.
According to him, “the Domestic Debt Exchange Programme will emasculate domestic private banks, as they will face capitalization and liquidity problems given that they will not receive timely and appropriate coupon payments from their bond holder (Government of Ghana).
He noted “that the directive of the Minister of Finance, to those banks he has so emasculated, to approach the Ghana Amalgamated Trust Plc (GAT) for support from the Ghana Financial Stability Fund (GFSF) opens them up to a takeover by investors in the GAT, if the Ghana Financial Stability Fund is not wholly publicly funded”.
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The Bawku MP, further contended “that political patronage and nepotism will inform the ultimate purchase of the shares in the private banks once GAT begins to dispose off these shares to realize the investments made in those banks (if GAT is not publicly funded)”.
Mr. Ayariga, served as Minister of Information and Media Relations and the Minister of Youth and Sports under the John Dramani Mahama administration.
His letter comes as government has once again extended the deadline for the domestic debt exchange programme to February 7, 2023, and the settlement scheduled for February 14, 2023.
In a statement issued yesterday, the Finance Ministry announced amended offers for individual bondholders who have requested to be exempted.
“…all individual bondholders are free not to participate. However, upon a successful DDEP, there will be very few of the ‘old bonds’ in circulation, and likely limit its traceability,” the finance ministry said.
The amended debt exchange offers individual bondholders aged 59 and below instruments with a maturity of 5 years instead of the 15 years proposed earlier, and a 10% coupon rate.
Retirees including those retiring in 2023 will also be offered instruments with a maximum maturity of 5 years, instead of 15 years, and a 15% coupon rate, according to the statement.
The government added that discussions are ongoing with Organized Labour and Pension Fund Trustees to agree on suitable terms for their participation in the domestic debt exchange programme.
To him, “the policy and strategic options chosen by the Finance Minister enables the illegal and unconstitutional expropriation of the private property of the present owners of domestic private banks and, possibly, private international banks operating in Ghana”.
Mr Ayariga, in his letter dated Monday, January 30, 2023 called “for the mobilization of the available intellectual competencies and political forces to defend the bona fides property rights of owners of private banks in Ghana”.
He pointed out “not to do so with a sense of urgency will constitute the greatest dereliction of duty of our political class. And the collapse of present owners of these banks and the takeover of these banking interests, similar to what was orchestrated in the PDS saga and the intended ‘Agyapa’ deal, will capriciously, unlawfully and criminally transfer enormous wealth and concentrate it in the hands of those who might enjoy the patronage of the Minister of Finance. This could disorient our democracy and potentially destabilize our politics. The history of the recent banking sector “cleanup” remains fresh in our memory.
The Government and the Ghana Association of Bankers (GAB) reached an agreement on the new terms for the Domestic Debt Exchange programme.
Earlier, the banks rejected the programme as announced by the government.
The GAB directed commercial banks not to sign onto the amended debt exchange offer over uncertainty surrounding the impact of the debt restructuring on the banking industry.
The association wants its concerns addressed before accepting the debt exchange offer, according to a letter sent to managing directors of banks. GAB told member banks that may want to consider the debt exchange in its current form to formally inform the association first before doing so.
“…From the uncertainty surrounding the programme, GAB recommends that all banks must stay any further movement on the exchange until our demands have been met. However, in the event that a bank may have to move forward to exchange, the MD/CEO must inform the CEO of GAB directly of the decision,” according to the letter sent to the banks.”
However, after an engagement with the Ministry of Finance, the Association of Banks that per the new terms, the participation of member banks is subjected to individual bank’s internal governance and approval processes.
“This is a significant milestone towards addressing our economic challenges, and will thus help to restore macro-economic stability and accelerate Ghana’s economic growth.
“With this achievement, the Government of Ghana reiterates its commitment to concluding the DDEP in time with all other stakeholders,” a joint statement from the Finance Ministry and GAB noted.
The BOG boss, has meanwhile, outlined measures that have been taken by the central bank to support domestic banks to deal with the impact of the domestic debt exchange programme on their operations.
This was after the BoG carried out a stress test for the banks ahead of the takeoff of the programme.
Concerns have been raised by some quarters that the debt exchange is going to weaken local banks.
Answering questions at the 110th Monetary Policy Committee (MPC) press conference in Accra on Monday, January 30, Dr Addison stated that “Yes, the stress test on the ability of the 23 or so banks to withstand the impact of the debt exchange, we did see the numbers, the implications for liquidity and the implications for capital.
“On the basis of that exercise, the BoG came out with high regulatory reliefs which we thought will help them deal with the impact on liquidity and capital. We agreed to reduce the cash reserves ratio from 14 per cent to 12 per cent on domestic currency deposits and reduce cash reserve ratio from 13 to 12 percent on foreign currency deposits. These measures give liquidity back to the banks, they address the issue of the impact of liquidity.
“We also dealt with the issue of capital by reducing the capital conservation buffer by 3 per cent, and capital adequacy ratio was reduced from 13 to 10 per cent. Even some of the technicalities surrounding the debt exchange in terms of derecognition losses, we agreed to have them restore its impact on capital over a four-year period.
“So there are a lot of things that the Bank of Ghana has agreed to do to help the banks deal with the implications of the domestic debt exchange on capital and liquidity.”