Governor of the Bank of Ghana (BoG) has assured that current banking reforms being implemented would help strengthen and stabilize the sector.

Dr Ernest Addison’s comments come at a time when there are reports of some banks experiencing serious financial distress, a development that requires an immediate regulatory intervention.

But speaking at the Annual General Meeting of the Association of Ghana Industries (AGI) in Accra, the Governor said these reforms are part of the financial sector reforms expected to strengthen and reposition the sector as a major growth driver.

He added that “some of the measures taken so far include the revocation of licenses of insolvent banks -Capital Bank and UT Bank- to safeguard the potential spillover threat on the financial sector”.

The Governor noted that “investigations into the reasons leading to the collapse of the two banks would also help guide policies on the current financial sector reform plan”.

Dr Addison added that “the institution of a roadmap to recapitalize banks in accordance with the capital restoration plans have so far been progressing satisfactorily”.

Proposed capital increase for banks

The Governor said the upward review of the minimum capital requirement for existing banks and new entrants, the upcoming introduction of a risk-based capital requirement regime under Basle II and Basle III frameworks as well as enhancing prudential regulation, should also address all the issues with the microfinance sector.

On the microfinance sector, the Governor noted that the regulator is strengthening its licensing requirement to remove unlicensed microfinance institutions from the system.

Ghana Bankers Association on 'distressed banks'

The Ghana Association of Bankers on its part has assured depositors that the sector is safe and sound.

Speaking to JOY BUSINESS after his bank took its turn at the Ghana Stock Exchange Facts Behind the Figures session, Vice President of the Ghana Association of Bankers, Frank Adu noted this challenge should be seen as temporary. 

He said it would soon be over “when you hear that one bank is in trouble. It does not mean that the entire industry is in trouble.”

Mr Adu, however, warned that media reports on the situation should be measured as it could cause some panic withdrawals in the industry.