Story and Photography by: Taku Dzimwasha for African Business
On 14th August, the Bank of Ghana (BoG), the country’s central bank, approved a deal which saw Ghana Commercial Bank (GCB) take over the deposits and some of the assets of UT Bank and Capital Bank.
The BoG announced that it had revoked the licences of the banks due to “severe impairment” of their capital. Their collapse sent shockwaves across the financial sector in the West African nation, with some analysts concerned that this was just the tip of the iceberg and other banks were at risk of contagion.
The BoG, which moved quickly to investigate the liquidity levels of the remaining 34 commercial banks in the country, found that seven banks failed to meet the minimum capital requirement of C120m ($26m). The vulnerable banks were eventually able, with the assistance of the BoG, to prove that they could recapitalise to the minimum requirements and avoid the same fate as the two liquidated banks.
However, following the scare, the Bank of Ghana mandated that all commercial banks in the country would need to set aside by the end of December 2018 a minimum of C400m in capital or have their licences revoked. This figure is three times more than the previous minimum capital requirement.
Only four banks – GCB, Zenith Bank, Barclays Bank and Standard Chartered Bank – currently have the required capital reserves to meet the target, and it is still unclear whether the other banks could raise the capital by the deadline, according to Sam Bediako-Asante, managing director of financial market consultancy firm Sambed Consult..
“There has been an attitudinal change on the part of business since Akufo-Addo has become president and the mood is positive,” Bediako-Asante says.
“The banks are currently meeting with their investors and shareholders to figure out if they can raise the capital,” he says. “If some of those smaller banks are not in the position to meet the figure then the only way is arranging for some of the bigger banks to acquire or merge with the smaller banks.
“In my opinion, this development would be a positive one for the sector because we already have too many banks and if we can get into a situation where we have no more than 10 strong banks, like in Nigeria and South Africa, then it will benefit our economy.”
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