BoG announces planned capital increase for banks

• Posted on August 14, 2017
• by Nana Kwesi Coomson
• Comment

The Governor of Bank of Ghana, Dr. Ernest Addison, has disclosed that the planned increase in capital requirement for banks would be announced in the first week of September.

The Governor of the Bank of Ghana disclosed this at the business luncheon after the Annual General Meeting of the Association of Bankers in Accra today.

Advice for Banks

The governor asked the banks to “prepare themselves” because the capital increase would indeed come on as planned this time round.  

He added that the necessary engagement with the banks would be done before the announcement is made.

Delivering an address at the event, the Finance Minister Ken Ofori Atta also said the increase will be informed by current developments in the economy, adding that the capital increase is critical to help make  Ghana an international financial service or hub in the sub-region.

The minister, however, maintained that government is prepared to extend the required support to banks to help them achieve this new requirement.

The minister noted that “the increment would come on and would be quite significant”

Possible capital requirement

Several amounts have been put out as the possible capital that the Bank of Ghana could settle on when the announcement is made.

For some, if the regulator is just looking at increasing the capital to just address the current challenges facing banks then they could settle on 230 or 260 million Ghana cedis. 

But with the call from the Finance Minister Ken Ofori Atta, for the need for some consolidation and even the disclosure that the increase could be significant, then the regulator could agree to an increase up to 530 million Ghana cedis.

The Bank of Ghana over the past 13 years has increased the capital levels by more than three times.

First was in 2003 where the capital level was increased to ¢7 million cedis. In  2008 this was revised to ¢60 million, it was later moved to 120 million cedis. 

Reactions

Some of the commercial banks have told JOY BUSINESS they would not have problems in meeting the proposed minimum capital requirement.

However, the President of the Association of Bankers has told JOY BUSINESS that some of the small banks and possibly the new entrants might have challenges in meeting the new minimum requirement

“This is because these new banks just secured capital from their shareholders to start the business, therefore going to them again for fresh capital now might be a challenge,” he said.

-Joynews