Banks Considering Mergers and Takeover – BoG

The Governor of the Bank of Ghana (BoG), Dr Ernest Addison has disclosed that the central bank has received some proposals from banks pushing for mergers and takeovers, following the announcement of the new capital requirement.

The Bank of Ghana increased the capital requirement of banks from 120 million cedis to 400 million cedis in September 2017.

The increment was applauded by some financial observers as a good development that may force mergers in the banking industry to reduce the growing number of banks in the country.

Speaking at the Bank of Ghana after maintaining the policy rate at 21 percent, the Governor of the BoG, Dr Addison stated that “we should expect some consolidation soon in the banking industry”.

He pointed out that a careful examination of the assets of banks in the country clearly shows that some may not meet the requirement; hence mergers and takeover will be the appropriate move.

“We have received a few proposals for mergers and takeovers. I can tell you that if you look at the structure of the banks, the shares of banks, both in terms of deposits and in terms of asset, you will find that you will have a cluster of small banks with less than 5 percent share in deposits about 10 or so banks.

Similarly, you will find a similarly clusters with banks with assets that are less than 5 percent. These are really 10 or 15 banks that belong to that part of the graph,” he said.

Dr Addison assured that there will be guidelines to supervise the smooth implementation of the mergers and takeovers.

“We expect that there will be consolidation in that sense. How that consolidation takes place, we want it to be market-driven. As we go along we will help them and guide them in terms of how these mergers are done. You could have a big bank deciding to take a small bank, or a small banks merging to be become a big bank. Or we could have designated anchor banks so that the small banks try to merge with the anchor banks. There are many models. We want the process to be market driven,” he stressed.

Source: Citibusinessnews