Business News of 2013-12-13

GCB advised to quickly reduce exposure to gov’t

Banking Consultant Nana Otuo Acheampong is asking the Ghana Commercial Bank (GCB) to quickly reduce their exposure to government to avoid any unexpected shocks in the future.

The advice follows Moody’s downgrade of GCB's deposit ratings from stable to negative.

The rating agency was concerned that government might not be able to pay on time, monies borrowed from the bank through bonds and treasury bills.

This is also due to the recent downgrade of the country’s credit worthiness.

Moody's also argued that looking at the bank's exposure to government, the state might not be able to bail out GCB in times of difficulties.

Nana Otuo Acheampong who is a Lecturer at the Osei Tutu II Centre for Executive Education and Research told Joy Business the bank must also work to reduce the perception that it is a government bank.

But the Managing Director of GCB, Simon Dornoo has assured depositors their funds are safe despite downgrade of the banks' deposit ratings by Moody’s.

Mr. Dornoo told Joy Business the bank has well diversified sources of income to sustain its operations.

Mr. Dornoo however concedes that the downgrade would affect their cost of borrowing which would affect lending rates.

The bank also maintained that this downgrade is out because it submitted itself voluntarily to Moody’s for a review.

Analysts say should other local banks submit to such reviews by rating agencies, the results may not be any different as the credit ratings of the country as a whole feeds into this.