The Council of State is urging banks that cannot meet Bank of Ghana’s new minimum capital requirement to consider merging.
The body of eminent Ghanaians met the central bank on Thursday over a petition submitted to President Addo-Dankwa Akufo-Addo by indigenous banks struggling to raise the new GHS400 million capital required.
In that petition, the local banks said the current increase in the minimum capital from GH¢120million to GH¢400million which was announced by Bank of Ghana in September 2017, giving the banks one year and three months to comply, is too short.
"If the duration is not extended sufficiently, its attainment by the indigenous banks could lead to a wholesale of the indigenous banks to foreigners. Such a situation will put the control of the banking industry in the hands of foreigners which could have future negative consequences on the economy particularly in the provision of credit to the agricultural sector and the informal sector in general," the local banks said in the petition.
The Bank of Ghana has said the upward adjustment of the capital requirement forms part of a holistic reform plan to further develop, strengthen and modernise the financial sector to support economic development.
After meeting with the Governor the central bank, Dr. Ernest Yedu Addison, the Council said it supported the measures instituted to ensure prudence in the banking sector and urged that the Bank of Ghana to intensify its public engagement.
“Ultimately, depositors’ interests must be protected at all times and the public needs to be assured to boost confidence in the banking sector,” acting Secretary to Council, Peace Okantey, said in a release Thursday after the visit to the central bank.
The Council of State is convinced that mergers will enable the indigenous banks to compete favourably in the and ensure sanity in the banking sector.
5 Banks meet new capital requirement
Governor of the Central Bank has indicated that five banks have met the new minimum capital requirement of ¢400 million even before the deadline.
Dr Ernest Addison disclosed this at a press conference last month after a review of the health of the economy.
President Akufo-Addo has, meanwhile, taken steps to set up a 10-member committee to act on the petition by local banks for a reprieve over the minimum capital requirement.
The decision to set up the committee was reached at an earlier meeting between the President and representatives from the local banks.
The 10-member committee will comprise of three members from the Bank of Ghana, three members from the Ministry of Finance, three members from the local banks and a chairperson to be nominated by the president.
According to Joy Business sources, the Committee should be ready by Tuesday 17th April and the final report be ready by 26th May.