Bank of Ghana (BoG) is considering a new figure of GH¢20 million as new minimum capital requirement for the banks, B&FT has gathered. The Central Bank has been in consultation with the industry players over the new policy for some time now. Its initial proposal however was for the minimum requirement to be increased from GH¢7 million to between GH¢50-60 million. Since the discussions began, the bankers have raised concerns ranging from the amount involved, the timing and the rationale behind the proposal. Some think the proposed figure is too high, or the timing is not right, while others believe that the state of affairs should remain until the banks decide on their own to recapitalize. They contend that capital is useful when it can readily be translated into assets to create value for shareholders and for that matter, recapitalization must be individual business growth strategy driven and not imposed. "If I have GH¢60 million right now without any prior strategic agenda on how to turn it around for value, I may end up being inefficient because the urgency to create value for shareholders may cause me to take wrong business decisions. "The capital adequacy ratio requirement is 10 percent but we are far above that. If the proposal comes into being, the ratio would certainly jump up and analysts will tell you it is inefficient to keep high adequate ratios,” one banker told B&FT. He said if the BoG thinks bigger banks are needed in the system, Standard Charted Bank, Barclays Bank, and Ghana Commercial Bank are equally big banks and hence what is necessary is to find out what they are not doing right. Some of the bankers believe that BoG is trying to encourage mergers and acquisitions in the industry in order to reduce the number of banks. “If it is to learn from Nigeria, where increment in the minimum capital from N2 billion to N25 billion in 2004 reduced the number of banks from 89 to 25, it is still pointless because the Nigerian industry at the time was facing problems - ranging from non¬compliance and other corrupt practices. But Ghana has no problem; all the banks are sound and compliant." Officials of Bank Baroda from India, one of two new banks commencing business this month were however supportive of the initial proposal, explaining that It approximates international best practice to position banking institutions firmly on the global stage. The Ghanaian banking industry has an asset base of GH¢7.79 billion (USS7.5 billion) as at the end of last year. Source: B&FT