Prime News Ghana

15 banks to collapse under new BoG recapitalisation measures

By Sam Edem
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Fifteen of Ghana’s commercial banks are expected to collapse over the next one year unless they experience a somewhat ‘miracle’ with their financing needs.

The development follows a Bank of Ghana directive that is expected to raise the minimum capital requirement for banking institutions to Ghc400 million announced on Monday 11th September 2017.

According to the new measure finalized during a closed door meeting between the central bank and key stakeholders in the banking industry, commercial banks will be required to fulfill their recapitalization target of Ghc400 million on, or before January 1st, 2019.

However, some market analyst in touch with Prime Business have expressed the concern that at least 15 of the 35 licensed commercial banks in the country are likely to fall significantly behind in meeting this new benchmark (these exclude international banking representative offices according to the BoG record as of 30th August 2017): a development which would result in yet another drama of banks collapse only this time – on a more massive scale.

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This concern has also been shared by some leaders in the country’s private sector.

Commenting on the issue to the media, Chairman of Groupe Nduom (owners of the GN bank), Dr. Paa Kwesi Nduom, expressed the fact that although his groupe’s bank is in good position to recapitalize, the new measure is certainly going to bring increased burden on some struggling banks in the country.

Dr. Nduom sighted the relatively small population of Ghana as compared with the number of banks as the basis for his assertion.

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He noted that, “all banks are not equal”. Hence, while the development will make some stronger, it is likely to make the struggling ones even more vulnerable to liquidate or collapse.

There have also been strong views from other quarters of the business public that, the new recapitalization measure will guarantee the needed capacity required by the financial institutions, to meet the rapidly growing financing needs of the private sector (a growth driven by the ambitious industrialization policy of the present government).