The Former Deputy Governor of the Bank of Ghana, Dr Johnson Asiama has said the collapse of Savings and Loans Companies is as a result of how the Bank of Ghana handled the cleanup exercise in the banking sector.

This follows the revocation of the licenses of 23 Savings and loans firms over serious corporate  Governance flaws.

According to him, the panic created by the clean up exercise led customers in the savings and loans companies to withdraw their monies which finally led to their collapse.

He said the statement by the Finance Minister three months ago that “We are going after the Savings and Loans Institutions” was catastrophic.

“Remember about three months ago we heard the Finance Minister say we are going after the savings and loans institutions, We also heard the Governor say the saving and loans institutions are next so everybody that placed their money with them sadly go to them and say look even though you people have not collapsed , we are hearing this and we are not sure of what will happen, so give us our money,” he said.

“Now if you have any financial institution that gets a run on them like that how can they survive?”

He added that the Savings and Loans companies would have been saved from its financial crisis if the banking sector was able to resolve UNI bank issue more carefully.

He added that difficulties in the banking sector has a serious impact on insurance sector and savings and loans.

“Bank sectors like savings and loans would have been saved from its financial crisis because difficulties in the banking industry has an impact on even the insurance sector and savings and loans”

“So, what I am saying is, if we had resolved UNI bank in a more careful way, it would have saved not all the savings and loans, but it would have saved some of the issues.

He noted that though there were serious regulatory flaws with the savings and loans, the banking sector should have just let them go immediately they noticed the flaws, than indirectly telling customers to remove their money from such banks.

“when you notice that there are regulatory flaws, let them go immediately and don’t issue threats because when you do that, you are indirectly telling people to remove their money from there.

Source: Graphic.com.gh