[Ghana] 25 banks still below 50% of new capital requirement
Over 25 banks in the country will have to race against time to meet the new capital requirement announced by the Bank of Ghana (BoG) as their current capital is less than 50 percent of the 400 million cedis quoted by the central bank, a Credit Risk Consultant and Banker, Emmanuel Akrong has said.
According to him, even though all 35 banks in the country are required to present their restoration plans, 3 will easily meet it while seven are in a position to meet it but for the payment of dividends and exclusion of unaudited accounts for the first half of 2017, among others.
The Bank of Ghana recently increased the capital requirement of banks from 120 million cedis to 400 million cedis to strengthen the financial system of the country.
Speaking to Bernard Avle on the Citi Breakfast Show, Mr. Akrong stated that banks in the country have to present their capital restoration plans within 45 days after the announcement by the Bank of Ghana.
“Twenty-five banks have below 50 percent of the 400 million cedis. They all have up to December 2018 to meet it but this is the status quo as at now. Section 105[of the Banking Act] says you have 45 days to present a capital restoration plan”.
After the 45 days, Mr. Akrong explained that banks in the country will have 180 days to meet the requirement by presenting the capital requirement to the bank of Ghana.
“So if by April 2018 you have not meet it and the time is exhausted, then you have missed section 105. Missing section 105, you can’t lend, you can’t open branches you can’t do so many things,” he noted.
He added that the law provides some allowance of days to give banks some more time to meet the requirement.
“After that you have another 90 days grace period and another 180 days. If you add all up, it gets you to December 2018. If after that you don’t meet it then section 107 kicks in, then BoG may in January 2019 appoint an official administrator if the bank is deemed to be insolvent by virtue of section 123”.