RE: RESPONSE TO FORMER DEPUTY GOVERNOR DR. JOHNSON P.

ASIAMA’S
INTERVIEW ON JOY FM

In response to the Press Release from the Bank of Ghana regarding the interview I
granted to Joy FM a couple of days ago, I wish to state the following:

1. The interview was meant for me to throw light on the circumstances and the
reasons for some of the issues arising in relation to the banking sector reforms.

2. I took the time to explain the genesis of the problem and also to let the public
know that although I was not the Governor at the time, in my view there were
well-intentioned reasons why some of the collapsed banks were issued licenses
at all. Key among these was the thinking at the time to encourage indigenous
local banks to also feature in the banking landscape.

3. I went on to explain the macroeconomic challenges that impacted the banking

industry as a whole, and the effort in introducing ESLA to help prevent a slide
into insolvency by many of the banks.

4. I went ahead to explain that a lot of engagements were done with the eight (8)
banks that were identified in the AQR exercise (you can check this with the head
of banking supervision at the time), and different scenarios were developed and
discussed with the Board of these banks. Therefore it is not true that we did
nothing.

5. I also explained that there was a roadmap (or strategy) for the recapitalization
banks and withdrawal of liquidity and hence these should have been followed. I
suggested for example that if Unibank’s claims on government was paid early in
2017, we could have prevented the daily clearing failures that persisted and
worsened the early redemptions and withdrawal of deposits.

6. It is a fact that I drew the Governor’s attention on this and we indeed had a
meeting with the Minister on the particular issue somewhere in May\June 2017.
Unfortunately, our view was not taken and hence the daily clearing failures
continued, leading to additional liquidity support.

7. I added that if after that the ESLA plc bond had been supported by a government
guarantee, all the GHS10 billion exposures to the banks would have been
secured to prevent the slide into insolvency. I also added that if an additional
special levy was introduced in early 2017 to pay off contractors, this also would

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 have supported the latter and prevent the slide into insolvency in some of the
cases.

8. I mentioned in the interview that if the extent of interconnectedness was taken

into account from the beginning of the exercise, systemically important banks
such as Unibank would have been handled differently through any of the ways
mentioned above. That was where I gave the example that at best we would
have engaged Republic Financial Holdings on the troubled banks because I
remember they wanted to purchase up to five (5) banks. Remember this would
have been done much earlier and not in 2018 or beyond when the gap between
the value of net assets and the deposit liabilities had deteriorated further.

9. Finally I explained that we had a strategy for the recapitalization of banks in

general and the fact that we were implementing the ICAAP framework to support
this across the banking sector. These are facts, and nothing to offend anyone but
if it does, then my apologies.

10. I want to state that my intention was not to spite anyone or the current
management of the Bank of Ghana, but to correct some of the misconceptions in
the discourse regarding the reforms. I must affirm that whatever decision was
taken was based on the evidence available at the time, and with a clear exit
strategy in mind.

11. It is true that I was Deputy Governor at the time when the decision was taken to
revoke the licenses of UT Bank and Capital Bank, but I would not want to go into
further details about those my terminal days in office.

12. I spoke as a Ghanaian and as a former staff of Bank of Ghana, just as some
other former staff or Deputy Governors have done in the recent past.

End

August 23, 2019