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Business News of Sunday, 5 August 2018

Source: www.citinewsroom.com

Only four local banks may survive recapitalization – Toma Imihere

Financial Analyst, Toma Imihere has expressed worry over the recent happenings in the banking sector, saying there may be only four indigenous banks left after the deadline for the banks to recapitalize elapses.

This, he said, is because most of the local banks are not financially strong and may not be able to meet the new minimum requirement of GHc400 million demanded by the Bank of Ghana.

“Basically we are facing a situation where if we are not careful, we will end up having at most, four indigenous banks left when the dust settles,” he said on Citi FM/Citi TV’s news analysis programme, The Big Issue on Saturday.

The Bank of Ghana raised the minimum requirement for banks from GHc120 million to GHc400 million and gave them up to the end of 2018 to meet the target or risk being merged or have their licenses revoked.

Barely four months to the end of the deadline, the Bank of Ghana last Wednesday revoked the licenses of five struggling banks and merged them into a new entity called the Consolidated Bank Ghana Limited.

The affected banks included uniBank, Sovereign Bank, Construction Bank, Royal Bank, and Beige Bank.

BoG explained that some of the affected banks obtained their licenses using dubious means and had non-existent capital.

The central bank also said whereas some of them breached the cash reserve requirements, others had negative capital adequacy ratio, adding that the shareholders of some of the banks also engaged in alleged dubious transactions.

We’re considering strategies to support local banks

The Ministry of Finance earlier welcomed the merger saying government “supports these efforts to strengthen and clean up the banking sector.”

It also said government is putting in place measures to financially support indigenous banks in the country a bid to boost confidence in the banking sector.



“To further strengthen the indigenous Ghanaian banking sub-sector, the Government is considering various structures through which it can provide financial support to help other indigenous banks meet the new minimum capital requirement of GH¢ 400 million by 31st December 2018.”



The statement from the Finance Ministry clarified that: “This support will be limited to indigenous banks that are solvent, well governed and managed and in full compliance with the Bank of Ghana’s regulatory requirements.”

Government support is the only way to go

Toma said he had earlier predicted the doom of some of the local banks but his suggestions were disregarded.

On government’s assurance of supporting the indigenous banks to recapitalize, Toma said it is the best thing for the financial sector.

“I think that now should be the emphasis for our advocacy for government. That is a very correct thing to do,” he added.