The Governor of the Bank of Ghana (BoG) has justified the decision for all commercial banks to have a minimum capital level of ¢400 million by December 2018. 

Responding to a question on having a separate capital level for each bank based on their categorization, Dr. Ernest Addison said the increase in capital requirement to ¢400 million was influenced by current developments in the economy.

According to him, “a bank that can mobilize adequate resources and finance big-ticket transactions is crucial in being able to deliver that transformation and this is why we are emphasizing the strength of the capital of the banks”. 

“So yes, if you think that you are operating in a “niche market” that does not require that you should have a ¢400 million level of capitalization you can choose to go for a savings and loan license,” Dr Addison added.

He believes there would not be a “turning back” on this decision to for every bank to meet the new capital levels of ¢400 million by December 2018.

Bank consolidation

Dr Addison also disclosed that some banks are currently in talks to merge or be acquired.

He explained that this is based on some formal communication with the Central Bank as some banks strategise to meet the minimum requirement.

The Governor is of the view that the recapitalisation of these banks should be market driven rather than being forced by the regulator.

“Let the market decide on the way forward in achieving the capital requirement,” he said noting that BoG is prepared to help struggling banks to recapitalise. 

Some banks have already disclosed to JoyBusiness that there are in talks with other financial institutions over a possible takeover.

The Managing Director of HFC bank Anthony Jordan recently told JoyBusiness that opened some informal talks with another bank to acquire it. He added that the move is based on the growth plans of the HFC.

The Managing Director of Zenith Bank, Henry Oroh has also told JoyBusiness they are open to any discussion that could see them acquire another bank to help that institution meet the new capital levels.

It has been projected by analysts that about 20 banks may struggle to meet these new requirements. 

Troubled banks

The Governor during a press engagement Monday also noted that the remaining banks that were having issues with Capital Adequacy Ratio have improved their position to satisfactory levels.

On banks that are yet the meet the ¢120 million capital requirement, Dr. Ernest Addison said all the banks have made some progress in this area also.