EIU ranks Ghana's banking sector risk to B, score remains unchanged at 60

Banks In Ghana2332323 Photo collage of some key banks in Ghana

Tue, 19 Apr 2022 Source: www.ghanaweb.com

BoG undertakes clean-up exercise in 2017

Regulatory measures by BoG leave banks in reasonable position – EIU

There is a long-standing reluctance to lend to the private sector – EIU report

The Economist and Intelligence Unit (EIU) has pegged Ghana’s banking sector risk to remain at B with an underlying score unchanged at 60.

According to the latest assessment released by the London-based firm, it noted that previous regulatory measures put in place by the Bank of Ghana have left banks in a reasonable position to weather shocks from the coronavirus pandemic.

It however added that the asset quality of the banking sector remains weak and there is a long-standing reluctance to lend to the private sector.

“Inflation remains high, limiting the ability of the Bank of Ghana (the central bank) to pursue further monetary easing measures,” the EIU said in its report released on April 13, 2022.

The report however said the largest drivers of banking sector risk in Ghana are financing and liquidity constraints.

Meanwhile, the banking sector risk rating is informed by scores for a combination of political, policy, cyclical and structural variables.

The banking sector clean-up exercise undertaken in 2017 saw the Bank of Ghana revoke licenses of nine (9) banks including: Heritage Bank, Limited, Premium Bank Limited, uniBank, Sovereign bank, BEIGE Bank, Royal Bank, Construction bank, UT Bank and Capital bank.

In addition to this, over 40 other financial institutions were also affected by the clean-up which included some fund management firms.

The government said it has spent GH¢22 billion to clean-up the banking sector. The move, it explained, was to save the deposits of clients of the various banks that compromised Corporate Governance for their interest.

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Source: www.ghanaweb.com
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