Bigger banks, larger competition needed

Ghana’s high interest rate regime can be checked if commercial banks begin to compete more on a larger scale, Director of operations of Republic Bank, Robert Le Hunte has told Starr Business.

Financial Experts believe such a move would help banks to take on more risk, and also reduce interest rates.

The interest rates in most banks range between 28 and 35 percent, while savings and loan companies charge between 45 and 120 per cent.

Le Hunte told Osei Owusu Amankwaah that banks in the country could undertake bigger financial risks and finance long term projects if there were larger and more competitive banks in the industry.

“A lot of the problems that people have been identifying [is] the fact that banks are not looking to take risks. The fact that banks are only dealing with short projects. The fact that their net interest margin is large. A lot of those things could actually be reduced…if the baking sector becomes a lot more competitive and you have more competition you will have larger banks competing against each other,” Le Hunte said.

Ghana currently has close to 30 universal banks.