“This is good news because this move will protect depositors’ funds and strengthen the banking sector and make it more solid,” he stated.

He cited the case of Nigeria when the banks were merged from 89 to 25 in 2011, which saw an improved banking sector in the country. Malaysia also reduced their banks through similar reforms to merge their banks from 80 to 12 solid banks.

The Ministry of Finance has also supported the move, saying it will strengthen and clean up the banking sector.

A statement issued by the Ministry of Finance said the measures, coupled with the government’s commitment to fiscal consolidation and macroeconomic stability, would help to improve the availability of credit to the private sector and reduce lending rates.

“Restoring trust and confidence in the banking sector by the BoG is key to supporting the government’s efforts to transforming the economy,” the statement said.

The statement said the government was interested in ensuring that the country’s banking system was not only resilient and capable of driving the transformation agenda but also supported the promotion and participation of strong indigenous banks.

“To this end, the government has incorporated a new bank called Consolidated Bank Ghana Limited and capitalised it with GH¢450 million.

“The Consolidated Bank will assume selected assets and liabilities of these five banks whose licences have been revoked by the BoG,” it said.

Ownership of new bank

The statement explained that the new Consolidated Bank, which would initially be 100 per cent government owned, would be a more robust and better-managed bank to ensure strong Ghanaian presence in the banking sector.

The statement assured the public that the government would continue to explore policy interventions to transform the entire financial services sector into a more resilient and dynamic industry to promote and establish the country as a regional financial services centre.

The statement added that the primary goals of the government were to protect customer deposits, protect jobs as much as possible, protect strong Ghanaian indigenous representation, protect the integrity of the banking sector, ensure strict adherence to good corporate governance and minimise systemic risk.