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Business News of Thursday, 5 July 2018

Source: Starrfmonline.com

Capital requirement: Tier banks – Seth Terkper

A former Minister of Finance Seth Terkper has suggested to the Bank of Ghana to reconsider its position on the minimum capital requirements for commercial banks.

Speaking on the Morning Starr on Thursday, Mr. Terkper stated the Central Bank should categorise the banks based on their financial muscles in order not to suffocate the indigenous banks.

Business magnate Dr Papa Kwesi Nduom said the BoG’s decision to increase the minimum capital requirement for all banks from GH¢120m to GH¢400m was not a good move.

According to him, banks have different focus and target groups and as such, some make more money than others and so asking all of them to fulfill the same requirement will only lead to the collapse of some banks.

Mr. Terkper said he agrees with Nduom’s stance and has called on the regulator to consider it.

“I have raised a point about tiering the banks and Dr [Papa] Nduom also raised a similar point,” the former Finance Minister told Francis Abban.

He stressed: “I believe in ranges and that’s what managers believe in. Let’s tier the banks. The big banks in one group and all. If you fall below, you drop to SML or a Microfinance.”

The Central Bank last year raised the minimum capital requirement to GH¢400 million, equivalent to about US$100 million and commercial banks in the country have up to December 2018 to raise the amount, which represents a 333.3 per cent increase from the current minimum capital of GH¢120 million.

Banks were last recapitalized in 2012, when the BoG asked them to raise their stated capital from GH¢60 million at the time to the current GH¢120 million.

That round of recapitalization led to the consolidation of three banks, The Trust Bank (into Ecobank), Intercontinental Bank (into Access Bank) and Amalgamated Bank (into Bank of Africa).