[ 2016-06-16 ]

Nasiru Issahaku, BoG Governor

Recapitalisation, mergers loom in banking sector
BANKS in Ghana could anytime soon be compelled by
the Bank of Ghana (BoG) to double their stated
capital to GHC120 million, Business Finder
understands.

This follows a prescription by the International
Monetary Fund (IMF) concerning the bank’s high
exposure to non-performing loans, interest risks,
and liquidity constraints.

Even before the Central Bank applies the new
minimum capital requirement some banks including
SocieteGenerale and CAL bank have begun the
process to increase their stated capital above the
GHC120 million cap.

Last year, accounting professional, KPMG,
conducted a stress test on banks operating in the
country. This was after the IMF directed the BoG
to conduct the test after an assessment of the
Ghanaian economy.

Though the regulator has remained tight-lipped
about the result, it is believed that banks
exposure to credit and interest rate risks are
very high.

Some market watchers are confident that any
decision to up the capital requirement of the
banks would trigger some mergers and acquisitions
in the sector.

Already, Ecobank Ghana has not ruled out
acquiring another bank in Ghana to consolidate its
gains in the very tough banking sector.

Its Group Chief Executive Officer, Ade Ayeyemi,
disclosed this at the Ghana Stock Exchange (GSE)
organised Facts Behind Figures programme last
week.

Running mate of the opposition New Patriotic
Party and a former deputy Governor of the Bank of
Ghana, Dr. Mahumudu Bawumia also revealed that the
IMF was pushing the BoG to recapitalise the
banking sector because of its high exposure to
government borrowing, bulk oil distributors,
interest rates among others.

Banking Consultant, Nana Otuo Acheampong told
Business Finder the move to recapitalize the banks
are still ongoing. “What is not certain is
whether the Bank of Ghana will use the ICAP-which
is a method of ranking banks by their capital or
sizes or the regulatory method which will require
fixed capital for all banks.”

Presently, the Central Bank has tabled two bills
before parliament which when passed into law will
replace the Bank of Ghana Amendment Act, 2007, Act
738.

They are the Depositors Protection Bill and
Special Deposit Bill. While the Special Deposit
bill will give all powers to banks to resolve
financial institution challenges, the Deposit
Protection bill will give guarantee or power to
depositors with regard to their savings.

Nana Otuo Acheampong explained further that if
the regulator had its way it will recapitalize the
banking sector before the end of the year.

In 2008 when the minimum capital of banks in
Ghana was increased from GHC15 million to GHC60
million, the motive was to consolidate the sector.
However, all the banks were able to meet the
minimum capital requirement.

Presently there are 29 banks operating in Ghana
with the number expected to shoot up to 32. Seven
of them are however tier one banks including
Fidelity Bank and Zenith Bank.

Source - thefinderonline.com

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