The Ministry of Finance has given a strong assurance that Ghana’s banking sector will remain strong and effective despite of claims of imminent collapse due to the huge debt owed them by Finatrade, a commodities company.
The Finatrade Group of companies which specializes in agri-commodities is indebted to about 20 banks to the tune of about GHc1 billion.
“They are not going to collapse the banking sector,” said the Minister of Finance, Seth Terkper.
The amount is said to be almost half of the GHc 2.6 billion stated capital of the entire banking industry.
But speaking in interview on the Citi Breakfast Show, Seth Terkper hinted that the Bank of Ghana and COCOBOD are dealing with the matter.
“What I can say is that the Bank of Ghana and COCOBOD are handling some of these issues, they are the regulators as far as this issue is concerned.”
He said the banks have also been advised to make provisions for some of these issues which could be described as bad loans noting that “one of the reasons why some of these things are coming up is that the Bank of Ghana is insisting that the banks provision for this.”
“Yes it [non-performing loans] did increase to about 9 percent but it was between 5 and 7 percent and it was on the insistence of Bank of Ghana that the banks should start provisioning for these loans including the public sector loans which is why we are doing the restructuring for VRA backed by the levies and others. So I think that it is relevant and important to go to the source to look at what has been the trend before we put out some of these things. The banks were made to provision more,” he told show host, Bernard Avle.
Banks sue Finatrade
Some of the banks dragged Finatrade to court in 2015 in a bid to have their monies recovered but they are yet to achieve that aim.
HFC awaits court’s judgment
HFC bank, one of the banks Finatrade is indebted to had earlier told Citi Business News it will await a court ruling on the matter before taking a move.
“I will think we all know the matters in relation to the Finatrade loans that is before the court and we will see what the court rules and what will be the possibilities of that,” Managing Director of HFC bank Robert Le Hunte noted.
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