Lawyer and lecturer at the Ghana School of Law, Bobby Banson, says Ghana’s banking sector clean-up could have been handled differently to reduce the impact on jobs, businesses, and customers.

Speaking on JoyNews’ Newsfile on Saturday, May 23, during discussions on the restoration of GN Savings and Loans' licence by the Court of Appeal, Mr Banson said that although intervention was necessary, authorities had other options that could have produced less severe consequences.

“I think that it could have been done. There was no doubt that there were issues. There was no doubt that something had to be done,” he said.

“But I think that we could have done it, and then the impact would have been less than we experienced over the period.”

Ghana’s banking sector clean-up, led by the Bank of Ghana between 2017 and 2019, resulted in the revocation of licences of several banks, savings and loans companies, and microfinance institutions over insolvency and regulatory breaches.

According to Mr Banson, the approach adopted by regulators focused heavily on shutting down troubled institutions, merging others, and pursuing individuals suspected of wrongdoing.

“In any event, the approach was let’s collapse the banks, let’s merge them, and let’s go after those that we think, as a state, have engaged in some illegality,” he stated.

He questioned whether an alternative strategy, including financial support for struggling institutions while preserving jobs and protecting customers, could have produced better outcomes.

“The question is how far we have gone or what is the effect of this approach?” he asked.

“Whether the other approach of let’s bail them out, let’s keep their jobs, and let’s see if we can go after those that we claim have engaged in any form of illegality.”

Mr Banson said that Ghana never had the opportunity to fully test such an alternative because regulators proceeded with the clean-up model that was eventually implemented.

“Well, posterity did not give us the opportunity to test that because we didn’t use that approach,” he added.

Touching on the recent Court of Appeal ruling concerning GN Bank, Mr Banson said the judgment does not necessarily bring final closure to the matter, as the Bank of Ghana still has the right to challenge the decision at the Supreme Court.

“The Court of Appeal decision does not end the matter,” he said.

“I believe that the Bank of Ghana, if they get a copy of the judgment, may exercise their rights to appeal against the decision.”

According to him, the case could become an important legal reference point for future financial sector regulation in Ghana.

“It is something that, for the guidance of the future, the Bank of Ghana may decide to appeal so that we can bring finality to it,” he explained.

Mr Banson said the outcome of any further appeal would help determine whether the actions taken by the central bank during the financial sector reforms were legally justified and whether similar measures should be repeated in the future.

“If it was right, then it would be upheld,” he stated.