Governor disproves foreign dominance of banking sector… endorses deposit insurance to boost confidence

Governor of the Bank of Ghana, BoG, Dr Ernest Addison, has rejected arguments that foreign controlled banks currently dominate the Ghanaian banking industry.

Proponents of the position also fear a blanket application of the minimum capital requirement will further hand the industry to the big non-Ghanaian banks.

In what he described as “setting the records straight”, the Governor disclosed that the data available does not suggest foreign dominance in the sector.

“In fact, if you look at the numbers, in terms of banks that are domestically controlled and those that are foreign controlled, I think the numbers are just balanced.”

Dr Addison was speaking at the Graphic/Stanbic Business Breakfast Meeting in Accra on the theme “Deposit insurance, catalyst for a stronger banking sector”,

The meeting, which brought together players from the financial services sector as well as captains of industry, provided the platform to discuss the deposit insurance scheme expected to be implemented this year following the passage of the Ghana Deposit Protection Act, 2016, Act 931.

The scheme aims to protect deposits of small depositors, while imposing on banks and specialised deposit taking institutions the responsibility to contribute towards the cost of resolution in the event of financial crisis and reduce the fiscal cost to government.

Dr Addison said the introduction of deposit insurance was important in the face of complicated developments in the financial system of the country hosting 34 banks, 37 savings and loans companies, 500 microfinance institutions and 141 rural and community banks.

“You can have the most prudent application of banking rules, have the most effective oversight of the financial sector to anchor stability, but you also need that deposit insurance scheme to provide the additional safety net”, the Governor emphasised.

He said the vision of the central bank in the realisation of a “Ghana beyond aid” was to achieve stability and sustainability in the banking sector.

This, he believes would be realised through consolidation  in order to have  bigger, well capitalised Ghanaian owned banks with effective boardroom oversight and high corporate governance standards.

Dr Addison called on the banks to be properly positioned to be able to finance key initiatives that the private sector would undertake to achieve the structural transformation agenda of government.

By Godfred Tawiah Gogo