The Receiver of the defunct 347 microfinance companies is set to pay the outstanding salaries as well as negotiated and exit packages of former employees of the affected institutions.
The move is to alleviate the economic impact of the resolution exercise on former employees of the affected companies particularly as the economic impact of the COVID-19 pandemic is having a toll on individuals and businesses.
A statement issued by the Receiver, Mr Eric Nana Nipah, said consultations with authorized representatives of the former employees to agree on processes of payment will begin effective today, Monday 13th July, 2020.
“To ameliorate the economic impact of the resolution exercise on former employees of these affected companies particularly in these times of COVID, Bank of Ghana has agreed to pre-finance the full settlement of employee related claims which otherwise rank as unsecured claims in the receiverships of these companies.
“The Receiver will in the week commencing Monday, 13 July 2020 engage with the authorized representatives of the ex-staff to agree on modalities for the payment of outstanding salaries and exit packages to ex-staff of these resolved institutions,” the statement said.
He further noted that he will only fully settle outstanding salaries and exit packages of former employees which have been duly validated, agreed and in the resolution process.
“In line with the hierarchy of creditor claims set out under Act 930, other creditors of the failed institutions will be settled by the Receiver upon validation of their claims and to the extent that the Receiver is able to realise value from the remaining assets of these institutions,” Eric Nana Nipah said in the statement.
Background
The Bank of Ghana, between 2017 and 2019, revoked the licenses of nine local commercial banks and over four hundred financial institutions comprising Micro-finance, Savings and Loans as well Finance Houses, for violating various regulations guiding their operations.
This affected about 4.6 million depositors whose monies could have been lost completely had the regulators not taken the action.
It all began in August 2017, when the Bank of Ghana (BoG) gave GCB Bank Ltd the green light to acquire two local banks UT and Capital bank due to severe impairment of their capital.
Later in August 2018, the Bank of Ghana consolidated five other local banks into the Consolidated Bank Ghana Limited.
Then in May, 2019, 347 microfinance companies also had their licenses revoked by the Bank of Ghana.
The Bank of Ghana later in August 2019 again revoked the licences of twenty-three (23) insolvent savings and loans companies and finance houses.
