Citi Business News has learnt that commercial banks in Ghana would have to increase their minimum capital for operation to at least 200 million cedis.
This follows the revision of the minimum capital requirement by the Bank of Ghana.
The new figure will represent close to a hundred percent increase in the current minimum capital requirement of 120 million cedis.
Some financial analysts have cited the development as partly contributing to the increased number of banks despite the country’s relative small population.
They however believe that the revision should result in mergers and allow the banks undertake huge capital intensive deals.
The Managing Director of Zenith Bank, Henry Oroh explained to Citi Business News the central bank’s projected 260 million cedis should also deepen the financial sector.
“The regulator has put forward about 260 million cedis. I think the minimum capital resetting was done deliberately by the government and the central bank to create bigger banks in the economy. We have a lot of banks that have very little capital and when your capital is very little, there is very little that you can do and when there are shocks, you’ll have some problems,” Mr. Oroh told Citi Business News.
Meanwhile the Managing Director of CAL Bank, Frank Adu Junior in a recent interview projected a minimum capital requirement of at least 200 million cedis to equip banks with the capacity to meet huge financial commitments.
“We need the strength and financial muscle to do the business of this country…if Goldfields, Golden Star, etc can raise about 1.3 billion to invest in a gold mine, don’t you think we could have private sector banks and companies taking up contracts to build harbours and runways?”
“Why shouldn’t we encourage the private sector to undertake these and take the burden off the government?” he further queried.
Banks submit documents for assessment
The Governor of the Bank of Ghana, Dr. Ernest Addison, last week told the Head of Business Desk at Citi FM, Vivian Kai Lokko in Washington that banks have submitted their reports for assessment.
According to him, the reports should help in determining the minimum capital requirement for the banks.
“The Bank of Ghana has written to them to submit recapitalization plans. We are waiting to look at those recapitalization plans. It has to be credible. We are hoping that in the next few weeks on the basis of their report that they submit, some decisions would have to be taken,” he hinted.
Banking Consultant urges economic capital requirement
In light of discussions in reviewing the minimum capital requirement of banks, Banking Consultant, Nana Otuo Acheampong has impressed on the Bank of Ghana to consider an economic capital requirement for universal commercial banks in Ghana rather than the regulatory minimum capital requirement.
The economic capital requirement, according to Nana Otuo Acheampong, will allow the banks the choice to either remain a small bank or grow to become a bigger bank which allows them opportunity to participate in multimillion dollar transactions.
By: Pius Amihere Eduku/citibusinessnews.com/Ghana