Ken Ofori-Atta
Finance Minister Ken Ofori-Atta has indicated that banks would be given up to a year to meet the new minimum capital requirement when the recapitalisation announcement is made.
The Governor of the Bank of Ghana (BoG), Dr. Ernest Addison, recently indicated that the pronouncement by the regulator could be made in the first week of September.
Commercial banks in the country require GHC120 million as minimum capital before they can operate in the country.
According to the Finance Minister “the increment would be significant and similar to what happened in Nigeria which forced a lot of banks in the country to merge”.
Mr Ofori-Atta, however, said government will be willing to help the local banks to recapitalize especially those it holds significant shares in them.
Possible scenarios
The Finance Minister has stated that the Bank of Ghana is yet to settle on the capital levels, some few days to the planned announcement.
It is not clear what the likely capital levels the Central Bank would work with as there are some scenarios being considered.
Scenario one
If BoG decides to use the new capital levels to push out the supposed “weak banks”, encourage some mergers and support others to undertake big transactions, then the regulator may look at GHC400 million and above or GHC520 million.
Scenario two
If the Central Bank wants to manage the situation or “absorb loses” then the regulator could settle on GHC255 million or up it to GHC350 million.
According to sources, the banks could be asked to turn to their shareholders for fresh capital injection in meeting the new levels or capitalization through income surplus or a combination.
Preparedness of banks
A look at the financial statements of the commercial banks as at December 2016 showed that if the capital is increased from GHC120 million to GHC350 million today, about 14 banks may be able to meet capital in a year.
If the capital is increased to GHC520 million, then maybe only 8 out of the 36 could still have their license to operate in the country.
Reactions
Some of the local banks told Joy Business that they can meet the new levels even if the Bank of Ghana settles on even more than GHC500 million.
Business mogul and founder of GN Bank, Dr. Paa Kwasi Nduom said the Bank can meet any capital level that is agreed upon or announced by the Central Bank.
Dr. Nduom is, however, worried about the approach of “one size fits all” stressing there should be special arrangement for local banks to recapitalize. He believes not all banks wants to be big or undertake bigger transactions.
The Deputy Managing Director of Heritage Bank, Peter Sangber Dery, another local bank, added that they can meet the proposed capital requirement, whatever levels the regulator agrees upon.
