Financial Economist Professor Lord Mensah has questioned the rationale behind the collapse of uniBank, insisting that the government ignored a significant GH¢2 billion recovery proposal that could have eased the cost of Ghana’s banking sector cleanup.
Speaking on JoyNews’ PM Express on Wednesday, July 30, Prof. Mensah argued that the decision to shut down the bank violated basic principles of financial management.
“GH¢2 billion was on the table, why ignore it?” he asked. “In banking, there’s what we call minimising the loss and then maximising the recovery.”
He stressed that this fundamental rule applies across all levels of banking — from the central bank to smaller institutions — and should have been applied in the UniBank situation.
Prof. Mensah questioned the logic behind collapsing a bank that, despite owing GH¢4.97 billion due to solvency and liquidity issues, had offered to repay GH¢2 billion. “You have to take it. Recovery is key, and losses must be minimised,” he stated.
Referencing the “too big to fail” doctrine, the economist emphasized that banks serve multiple interests, not just those of their owners. “You’re looking at government interest, employees’ livelihoods, and the owners. You can’t make such decisions by focusing only on ownership failure.”
He pointed out that banks contribute significantly to the state through corporate taxes ranging from 25% to 30%, and those revenues are lost when institutions are collapsed. More critically, he lamented the impact on employees. “People who were feeding their families and educating their kids lost everything,” he said.
According to Prof. Mensah, the cleanup sacrificed not only jobs but also placed an undue burden on the taxpayer. “Why do you collapse the bank and then transfer all the possible obligations to the taxpayer, to the tune of GH¢21 billion or more?” he asked, referring to the overall cost of the financial sector reforms.
He argued that rejecting UniBank’s GH¢2 billion offer in favour of liquidation made no financial sense. “That money could have gone toward offsetting the cleanup cost. Ignoring that opportunity was costly.”
Prof. Mensah concluded that the situation illustrated a broader failure in banking oversight. “If you take all these things into perspective, you come to realise that the principles of banking were not followed at the time we were cleaning up the banking sector.”
Agreeing with fellow panelist Martin Kpebu, he suggested the motives behind the UniBank collapse may have gone beyond economic reasoning. “That is where my good friend Martin Kpebu will say that the motive was more of witch hunting than following banking principles,” he added.
