Some banks who are owed by the VRA in loans contracted for the purchase of light crude oil and gas, have described as realistic, government’s plan to settle the debt within 2 to 5 years.
Documents available to Citi Business News indicate that the State Owned Enterprise owes some 13 local banks and other foreign financial institutions, to the tune of 4.4 billion cedis (1.1 billion dollars) as at March this year.
Finance Minister Seth Terkper on Wednesday, August 31st, announced that the Ministry has made arrangement with the Bank of Ghana to pay 250 million cedis out of the total debt.
Commenting on the latest move, the Managing Director of First Atlantic Bank, Odun Odunfa explained to Citi Business News he is hopeful the move will go a long way to make the affected banks more resilient.
“I think it’s a realistic period and when you are looking at a restructuring scenario, you will have to consider a fairly longer term than what you would have been able to agree to initially,” he observed.
The debts, among other things have also contributed to the huge Non-Performing Loans portfolios of banks in the country.
This has also affected the performance of banks for a greater part of 2015 and this year.
But Mr. Odunfa says he is optimistic the intervention will restore confidence in the economy to attract investments.
“My perspective is that once we have a resolution there is more confidence in the economy, there is more confidence in the cedi, lending institutions both local and offshore have more room on their balance sheets to do more for the economy and that is what we should do,” he added.
Meanwhile the First Deputy Governor of the Bank of Ghana, Millison Narh has also stated that banks can now compute the payment of the legacy debts as part of the Current Account Class, contrary to the current practice where the debts are classified under the Non Performing Class.
First Atlantic Bank commissions 3 new branches in Accra
Meanwhile First Atlantic Bank says it is committed to its target of increasing its branches to 30 by the end of this year.
Speaking to Citi Business News at the commissioning of the bank’s new branch at East Legon, Odun Odumfa maintained that its strategy has kept it despite the challenging economic situation.
“It’s a challenging times for the economy but we have our plans and it is our aim that by the end of the year we will have coverage across the country and reached 30 branches. We have twenty-three branches now, good times and bad times both come but what sustains is being consistent and focused,” he stated.
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By: Pius Amihere Eduku/citibusinessnews.com/Ghana