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Business News of Tuesday, 17 July 2018

Source: citinewsroom.com

Merging banks take time – Issah Monney

A spokesperson for the Association of Indigenous Universal Banks, Issah Monney, has said the Central Bank’s directive to local banks to merge to meet the new minimum capital requirement is in bad taste and unfair.

Banks in Ghana have until December 2018 to raise a GHc400 million new capital requirement or risk being closed or becoming savings and loans institutions.

Whereas the foreign-owned banks are not complaining, the 17 local ones have asked the Bank of Ghana to give them more time to raise funds for the recapitalization.

They have also petitioned the Presidency to intervene on their behalf.

But the central bank advised them to merge in order to join forces and recapitalize.

Speaking on the Citi Breakfast Show on Tuesday, Spokesperson for the Association of Indigenous Banks said forcing the local banks to merge may spell doom for the Ghanaian economy.

“Mergers are not by force. Merges come into operation because two organizations have seen a business opportunity and by merging they can increase their capital, customer share and market share. It is deliberate, and it is an opportunity. So when you force two people to work, it is like marriage, it doesn’t work.”

Six months too short for mergers

He said even if the banks agree to merge; three or six months is just not enough to go through the processes.

“If two banks have to merge, do you think three months is enough for negotiations for everybody to do due diligence on the documents of one another and be able to ascertain the facts before they merge? It takes more than a year. That is what we are saying.”

“The banks are not saying that they will not merge. There are some who have said that they have the money and they will be able to raise it, and others are saying they need time. So even if it is a merger, it takes some time to do that. It can’t happen within six months, or one year, there would be a lot of mistakes, and that is what the banks want to avoid,” he added.

Happenings in the banking sector

Mr. Monney’s remark comes on the back of recent happenings in the banking space.

There are reports that Beige Bank, as of June 2018, had sacked over 500 of its staff as part of measures to restructure the company in anticipation of current changes within the industry including a possible merger.

Two local banks – UT and Capital – have already collapsed after they were declared insolvent.

A third one – Unibank – is currently in administration as private audit firm KPMG Ghana is running it.

This was after the Bank of Ghana announced it has taken over the bank to prevent it from collapsing.