With less than six weeks to the end of the December 31st deadline for banks to meet the central bank’s minimum capital requirement, a banking consultant Nana Otuo Acheampong says he is not expecting more than 22 banks by next year.
The Governor of the Bank of Ghana (BoG), Dr. Ernest Addison stated at the last announce of the policy rate that about 19 banks have so far met at the time.
In an interview with Citi Business News, Nana Otuo Acheampong stated that the banking industry will be more resilient if it had fewer but well capitalized banks.
“We have been analyzing from our office here the financials that have been produced for 30th of September, 2018. So far out of the 23 or 24 we have examined more than 19 have met the minimum capital requirement. But there are still the others who are yet to publish. I would however not be happy if all the remaining banks meet the requirement. We started with 36 and we should probably end up with about 20 or 22. If we are able to do this we would get the resilience in the sector that we expect.”
He argued that the banking sector will be strong if the capital base of banks are strengthen to make them withstand shocks.
Citing some other countries as example Nana Otuo Acheampong stated that Ghana can learn from West African countries such as Nigeria.
“Nigeria started with 89 and they ended up with 22 or so. Malaysia started with 80 and ended up with 12. So if you ask me about my expectations, well I don’t expect us to end with the same number that we started with.”
RECAPITALIZATION OF BANKS
Since September 2017, commercial banks in the country have been racing against time to recapitalize. The banks have resorted to various options such as fresh capital injection from shareholders, raising funds from the stock market or merging.
About twenty banks have so far met the requirement with the remaining working round the clock to beat the deadline. The 400 million Cedis minimum capital level is one of the reforms that the Bank of Ghana is pursuing to reform the banking industry.
If any bank is unable to meet the capital level, it will either lose its license and drop to a Savings and Loans category or may opt to completely fold up its business.
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By: Bobbie Osei/citibusinessnews.com/Ghana