Fmr. Cal Bank CEO Questions Feasibility of Mahama’s Promise to Restore Licenses of Collapsed Banks

Former Chief Executive Officer of one of Ghana’s indigenous banks, Cal Bank, Frank Adu Jnr, has revealed a reality check on President John Dramani Mahama’s campaign to reinstate the licences of banks that were collapsed during the controversial banking sector cleanup.

Alhough the promise was appealing given the circumstance, Frank Adu says it is not economically or operationally feasible.

The justification of his verdict, he explains, lies in the fact that the banks in question no longer exist in any real or functional form.

President Mahama, then candidate Mahama, ahead of the 2024 General Elections vowed launch fresh investigations into the banking sector cleanup exercise and where possible, return the banking licences of the collapsed banks.

In his view, the exercise was unfair and unjust insisting that it was highly politically motivated.

Although Frank Adu agrees that the exercise was ill-intended and there was no justifiable cause, President Mahama’s promise also seems far-fetched.

Frank Adu’s critique is both legalistic and practical. He argues that banks are not no longer in existence to allow its return to their original owners. These banks were collapsed for a new bank, CBG to be created.

This means, there are no assets and liabilities in existence in the name of the affected banks to be returned to the real owners.

“I think that’s far-fetched. I mean, to reinstate a bank’s licence does not give it back its assets and liabilities. Those customer deposits have moved on. The liabilities are customer deposits. The assets are customer loans. They moved on. So maybe the best thing to do is, I think they were put into CBG If you take CBG, then you say that you now give CBG to the owners of the banks, which were collapsed into CBG,” the former CEO of Cal Bank explained in an interview with Accra-based JoyNews.

But all hope is not lost yet and he believes there is a way out. In his view, the only realistic conversation could be around ownership stakes in CBG, if any. Frank Adu explains that since the assets and liabilities of victim banks were used to establish CBG, the government can consider the assets each of the collapsed banks contributed to the capital and then turn it into equity stakes in the bank for the owners.

“If UT Bank’s assets contributed 20% of the capitalisation of what you call CBG, then UT Bank owners may be entitled to 20%. But to just give it back, I don’t see how that’s going to work.”

President Mahama’s promise has gained traction among sections of the public who believe the closures were unjust and politically driven. For affected shareholders, former employees, and customers, the emotional resonance of “restoring the banks” runs deep.

But Frank Adu’s remarks raise the uncomfortable truth: what exactly is being restored, and to whom?

His comments do not reject the need for justice or reform but rather call for honesty, clarity, and feasibility in addressing the aftermath of the cleanup.

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