Business News of 2014-05-22

Royal Bank joins calls for BoG to review forex rules

The Royal Bank has joined in calls for Bank of Ghana (BoG) to review the new and revised forex rules.
The bank introduced the rules in February this year as part of moves to stop the cedi from further free fall against the major foreign currencies including the US dollar, British Pound and Euro.
Among the rules commercial banks were banned from issuing cheques and cheque books on Foreign Exchange Accounts (FEA) and Foreign Currency Accounts (FCA).
Banks are also prohibited from granting a foreign currency-denominated loan or foreign currency-linked facility to a customer who is not a foreign exchange earner.
The central bank also banned offshore foreign deals by resident companies, including exporters in the country.
Also over-the-counter cash withdrawals from foreign exchange and foreign currency accounts not exceeding US$10,000 shall only be permitted for travel purposes outside Ghana or its equivalent in convertible currency per person per travel.
The quotation and transaction of goods and services in foreign currency was also banned by the central bank.
However there have been calls for the central bank to review the rules by stakeholders in a number of sectors including the banking, real estate industry, hospitality as well as importers and traders.
Head of strategic planning research and corporate affairs at the Royal bank Kwame Baah – Nuakoh tells Citi business news the rules are having a negative effect on banks.
‘as far as the empirical evidence is concerned the rate of depreciation monthly has slowed down, so for the bank of Ghana, the move is working, but for a bank what we see on the books is that our customers are not bringing their forex to the bank so we are talking about the unintended consequences of the review which we want to be reviewed so if the BoG can review that why not’.
Meanwhile the Royal bank has told Citi Business News it intends to embark on a massive expansion exercise across the country.
The bank a wholly owned Ghanaian bank founded by the CEO of Global Haulage company limited Alhaji Adamu Iddrisu commenced operations in December 2012.
It is strongly focused in the service and hospitality, agro processing, oil, energy and mining sectors as well as the construction, telecommunications and commerce industries.
It commenced operations with a stated capital of 100 million cedis which was above the bank of Ghana’s minimum capital requirement of 60 million cedis.
After only a year in operations it recorded an impressive profit before tax of 13.1 million cedis for last year.
It opened 12 branches within a year in operations.
According to the Head of Strategic Planning Research and Corporate Affairs at the Royal Bank Kwame Baah–Nuakoh this made it possible for the bank to put in place the appropriate infrastructure and branch network during the period.