Finance Tough times for local banks in Ghana as they struggle to meet new capital requirement

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Indigenous banks are in for a tough time as analysis conducted on their latest financial results

Local banks in Ghana could lose their operation license if they are unable to meet the new minimum capital requirement of $90 million by January 1, 2019.

The BnFT reports that out of the 16 Ghanaian-owned banks analysed by financial expert with Royal Bank in Ghana Emmanuel Akrong.

Emmanuel based his analysis on the 2016 financial results of these local banks.

Some local banks have put in measures to enable it raise the money. CAL Bank  announced that it is not paying dividends to shareholders for the 2017 financial year in order to meet the $90 million minimum capital.

 

Currently, the bank has a shortfall of $13.5 million – the lowest among the local banks.

The only local bank capable of meeting the new minimum capital requirement is the GCB Bank.

Prudential Bank, UMB, ADB and NIB all have capital shortfalls in excess of $67.6 million, while Fidelity, CAL, Sovereign, Premium, GN, Omni, Heritage, Construction and GHL Banks all have shortfalls below that figure.

play Governor of Ghana Ernest Addison

These shortfalls, coupled with the governor of Ghana Ernest Addison’s pledge to sanitise the banking industry following years of what he has often described as weak or lax regulatory function, could be pushing some banks to the brink amid reports that local banks have petitioned the presidency to urge the central bank to reconsider its December 2018 deadline.

Speaking at last month’s MPC press meeting, the BoG Governor did little to assuage fears of the domestic banks – revoking two local banks’ licences and putting one under administration.

“The indigenous banks are improving and trying to rebuild capital. Obviously, we have a number of them that are smaller so we expect they will consolidate. As part of the broader recapitalisation process for 2018, we expect that the smaller indigenous banks will, in a sense, come together and become stronger.

“We’ve also put out new guidelines for corporate governance, which should help improve governance structures particularly in the indigenous Ghanaian banks,”
the Governor told the press.

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