UT and Capital Banks are the only 2 insolvent banks in the system – BoG

• Posted on August 15, 2017
• by Nana Kwesi Coomson
• Comment

The Bank of Ghana has urged depositors, there is no cause for panic following the collapse of two Ghanaian-owned banks.

“I can emphatically tell you that these are the only two insolvent banks in the system”, the Governor of the Central Bank, Ernest Kobina Addison said at a press conference Monday.

The assurance comes following reports that the collapsed banks – UT and Capital bank – are part of nine others said to be distressed.

Deputy Finance Minister Kwaku Kwarteng had said the collapsed two represent the severest of the list of under-pressure banks.

But the Governor has explained, the others are no longer at risk of being taken over.

Under the central bank’s supervision, he said some distressed banks have been able to stay up after struggling to meet the 10% capital adequacy ratio.

“About five banks are already above the 10% threshold and so there has been a lot of progress in terms of the building of their capital margins,” he reported.

Non-performing loans are at the heart of the reasons leading to the collapse of the troubled two.

The central Bank has reported bad loans on the books of commercial banks increased from 2.72 billion cedis recorded in 2014 to 4.52 billion cedis in 2015 – a 14.9% increase.

Despite the challenges of bad loans on the books of banks, the Central Bank insists it is not as bad to trigger any further collapse.

“I don’t think there are any issues there in terms of whether there are other banks that are in the same situation as these two banks. No, they are not,” Ernest Addison maintained.

He assured clients, the “banking system as a whole is solid and well capitalised” and noted a bank in weaker financial position does not reflect the story of the industry.

–Myjoyonline