Consolidate to become stronger-BoG tells indigenous banks

The only resort for most indigenous banks in the country to meet the 400 million capital requirement is for them to merge and consolidate, the Bank of Ghana has said.

This follows public concerns that Ghana is losing out in the banking sector where indigenous banks are already in the minority and are mostly undercapitalized.

A section of the public fear the banking sector will soon be dominated by foreign owned banks, especially Nigerian and South African banks that are well capitalized.

But Governor of the Bank of Ghana Dr. Ernest Addison, who addressed these concerns at a press conference in Accra, revealed that six banks that are near collapse, but are currently being supported by the Central Bank, include some indigenous banks.

He urged the banks to merge to build their capital base and become stronger and more competitive.

“Obviously there are a number of them that are smaller, so we expect that they will consolidate. And the consolidation will help them as part of the broader recapitalization process for 2018. We expect that they will come together and become stronger,” said Addison.

Few months after two indigenous banks, UT and Capital Banks collapsed, Unibank Ghana Limited, another indigenous bank has been declared seriously challenged.

However, the banking sector, as described by the BoG is still liquid, profitable and solvent with a total asset base increasing to GHS95.1 billion in February 2018 indicating an annual growth of 13.7 percent compared with the 15.3 percent recorded in December 2017.

The asset growth was mainly funded by deposits which went up by 12.6 percent on a year-on-year basis.

The Capital Adequacy Ratio (CAR) also improved to 19.2 percent in February 2018.

The regulator has further revealed that a new guideline for corporate governance has been introduced in the banking system to help in improving governance particularly in the indigenous Ghanaian banks.

By Nana Oye Ankrah