[ 2017-05-11 ]

Banks demand payment plan for BDC debts
Banks that are exposed to the Bulk Oil
Distribution Companies (BDCs’) debts want
government to draw out a plan to facilitate
payments from the Energy Sector Levies Act
[ESLA].

They argue that the plan will facilitate payments
and help them make the necessary provisions
accordingly.

Explaining the impact of the absence of a detailed
plan on the repayment scheme for banks, the
Executive Director of CAL Bank, Philip Owiredu
said the banks have been finding difficulty
adjusting for the unpaid debts.

“Unfortunately, government has not been able to
put any structure round the regular cash flow
coming out from this levy to be able to model
anything and determine how much to be disbursed
every month,” he asserted.

Mr. Owiredu was responding to questions during the
bank’s fact behind the figures session for its
first quarter performance for 2017.

According to him, even though some payments are
being effected, an agreed plan should help both
government and the affected banks.

BDC debts estimated at 4 billion cedis

Claims accruing to the BDCs for 2014 and the first
half of 2015, amounted to 2.5 billion cedis.

Although accurate figures are yet to be reported
on their claims post 2015, the banks are
projecting the figure to increase to about 4
billion cedis.

Government has since made payments totaling 1.5
billion cedis with an outstanding amount of 1.9
billion cedis.

Philip Owiredu further stated that the model
should help reduce the rising NPLs of banks.

“The law says the levy shall be in place for ten
years and on an annual basis, out of the levy, at
least about 90 million cedis is going to be used
to pay the BDCs,”

“So the cashflow is coming in and it is being
held by banks including CAL bank and that is what
we want to engage government on to ensure that at
least we agree on what we are supposed to do
whether it is going to take a year or ten to get
it through,” he observed.

CAL Bank’s 2017 Q1 performance

In the first quarter of 2017, CAL Bank’s
customer deposits increased from 1.6 in the first
quarter of 2016 to 2.3 billion cedis.

Also the bank’s NPLs went up to 9.2 percent from
4.8 percent.

Meanwhile, its profit dropped by 22.3 percent in
the first quarter of 2017.

The figure dropped from 40.8 million in the first
quarter of 2016 to 31.7 million cedis in the same
period in 2017.

Source - citibsinessnews.com

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