On Friday 4th January 2019 the Governor of the Bank of Ghana, Dr Ernest Addison held a press conference on the state of banks which had met the GHC 400 million minimum capital requirement.
As of October 2018, there were 30 banks in the country but due to the race to meet the Minimum Capital Requirement and its concomitant effects, the number had been cut to 23.
From 36 in July 2017 to 34 in July 2018, and down to 30 then now 23. One can argue some fair amount of consolidation. But as we discuss this let us not forget how we got here. This journey will be interspersed.
Where can we start from?
Find below a chronological presentation of events that occurred in the banking sector. This information is mainly from the Bank of Ghana's website and Public Notices.
Monday 11th September 2017
Bank of Ghana announces the NEW MINIMUM PAID UP CAPITAL. From GHC 120 million to GHC 400 million. Banks were required to meet this by;
a) Fresh capital injection.
b) Capitalization of income surplus (converting profit to capital)
c) A combination of fresh capital injection and capitalization of income surplus.
Banks were not allowed to capitalize revaluation reserves, reserves on financial instruments through other comprehensive income, statutory reserves, credit risk reserves and unaudited profit.
A number of banks in 2018 did this and met the minimum capital requirement. 16 of them. One example is Ecobank that got shareholder approval to undertake a capitalization of their income surplus as far back as August 2018.
Tuesday 20th March 2018
Bank of Ghana appoints an official administrator for UniBank as it revealed the bank was in a poor financial state.
The purpose of the administrator was to help steer the affairs of the bank in the right direction. This administrator was Accounting Firm KPMG.
UniBank has since ceased to exist as a newly established indigenous bank, Consolidated Bank Ghana purchased and assumed some assets and some liabilities of the bank together with 4 other local banks on 1st August 2018.
Tuesday 20th March 2018
Bank of Ghana releases report titled STATE OF THE FINANCIAL SECTOR IN GHANA.
This Chronicles the state of Ghana’s financial sector as at the time of the release. This followed the collapse of UT & CAPITAL BANK, UNIBANK being put under administration and some activities in the Microfinance sub-sector.
Thursday 22nd March 2018
Bank of Ghana releases The Banking Business-Corporate Governance Directive.
Corporate governance failure was at the heart of the collapse of UT & CAPITAL Banks. The regulator in line with relevant portions of the Banks and Specialized Deposit Taking Institutions Act 2016 ACT 930 sought to operationalize it.
Monday 30th April 2018
Bank of Ghana releases a raft of reports giving the true state of the financial sector on the back of the actions it had taken and to allay the fears of the public.
They were: PROMOTING A SAFER BANKING SYSTEM IN GHANA & TOWARDS A RESILIENT BANKING SECTOR THAT SUPPORTS A VIBRANT GHANAIAN ECONOMY
Thursday 3rd May 2018
Bank of Ghana releases another report on the sector to allay fears and reassure the public.
It is RESTORING CONFIDENCE AND BUILDING A RESILIENT BANKING SYSTEM IN GHANA
Friday 4th May 2018
Bank of Ghana appoints an Advisor for Sovereign Bank as it again revealed that the bank needed some guidance in organizing its affairs.
Thursday 28th June 2018
Bank of Ghana issues Capital Requirements Directive.
This was meant to ensure banks possess the necessary capital to match their risk profile or the activities they undertake.
Thursday 5th July 2018
Bank of Ghana releases FIT & PROPER, MERGERS & ACQUISITIONS DIRECTIVE.
These directives were again contained in the Banks and Specialized Deposit Taking Institutions Act 2016 Act 930.
The Fit and Proper Directive for example spelt out who may or may not qualify to direct the affairs of banks and other specialized deposit-taking institutions and how we can determine this.
Monday 16th July 2018
Bank of Ghana annuls acquisition of shares of ADB BANK LTD.
This saw a number of previous shareholders of ADB namely; Belstar Capital Limited (Belstar), Starmount Development Company Limited (Starmount), SIC-Financial Services Limited (SIC-FSL), and EDC Investments Limited (EDC).
ADB is currently owned by the Government of Ghana and Bank of Ghana through the Financial Investment Trust and is one of the banks billed to receive support to recapitalize.
Friday 27th July 2018
Bank of Ghana releases Financial Holdings Directive in order for financial holding companies to know the areas they can and cannot play in. This was to bring sanity into the financial space.
Wednesday 1st August 2018
Government establishes a new indigenous bank, The CONSOLIDATED BANK GHANA. Simultaneously, five ailing local banks were collapsed and this bank purchased and assumed some selected assets and liabilities.
A bond was issued to cover the gap between the assets and liabilities.
Thursday 16th August 2018
Bank of Ghana establishes Ethics and Internal Investigations Unit to ensure that staff who were complicit in the bank failures are brought to book and going forward such complicity is curtailed.
Wednesday 5th September 2018
Bank of Ghana releases Directive for Voluntary Winding up of Regulated Financial Institutions
Thursday 27th December 2018
Bank of Ghana releases Final Corporate Governance Directive. This supersedes what was done on 22nd March 2018.
The interventions stretch beyond what has been listed but it is clear that the regulator is doing all in its power to ensure the sector is strong.
Friday 4th January 2019
Governor Dr Ernest Addison said the Banking Sector Clean-up is done. Alas!
The effect of some of these directives will be tested in the coming months; COMPLIANCE is at the heart of this.
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