Business News of Fri, 8 Sep 20177
BoG raises minimum capital to GHC400 million
On Monday, September 11, the Bank of Ghana will formally direct banks in the country to recapitalise to GH¢400 million, equivalent to about US$100 million.
The central bank will give the banks until December 2018 to raise the amount, which represents a 333.3 per cent increase from the current minimum capital of GH¢120 million.
A source told Graphic Online that Governor of BoG, Dr Ernest Addison, announced the figure to bank executives at a closed door meeting Friday.
The meeting was to prepare the banking sector CEOs under the umbrella of the Ghana Association of Bankers (GAB) for the formal announcement Monday. The announcement should bring to an end two years of speculation on how and when the central bank will recpaitalise commercial banks.
The source explained that all the CEOs at the meeting appeared comfortable with the figures.
Although a huge jump, the announcement of the new minimum capital is timely, given the growth in the economy in recent times and the financial demands that it brings.
The recapitalization is, therefore meant to help build strong banks capable of financing big ticket transactions, especially in the petroleum sector commercial oil production has led to an influx of multibillion investments.
Beyond calming nerves of shareholders of banks, some of whom will clutter to find the funds, the formal announcement on Monday should set the stage for ongoing merger talks to firm up.
Banks were last recapitalised in 2012, when the BoG asked them to raise their stated capital from GH¢60 million at the time to the current GH¢120 million.
That round of recapitalization led to the consolidation to three banks, The Trust Bank (into Ecobank), Intercontinental Bank (into Access Bank) and Amalgamated Bank (into Bank of Africa).
In August, this year, the licenses of UT and Capital banks were also revoked and portions of their assets and liabilities sold to GCB Bank, after they were found to have been deficient and illiquid in capital.
It is expected that the new stated capital of GH¢400 million will further lead to consolidation in bank numbers.
Following the collapse of the two banks, the industry now has 31 banks, with additional three new licensees due to commerce operations by next year.