Gh¢400m Minimum Capital For Banks Too Low- Finance Expert

Kenneth Thompson, Chief Executive Officer, Dalex Finance says the new capital requirement of GH¢400 million for banks in operating country is too low.

According to him the Central Bank should have increased it to GH¢800 million.

Speaking in an interview with the PUBLISHER BUSINESS, Mr. Thompson said “I think the increase is a step in the right direction but I was expecting a higher amount than what was announced. I was expecting GH¢800 million plus”.

He said GH¢400 million is too low to force reconsolidation in the banking sector.

“Before the increase there was talk about consolidation in the banking sector; mergers and acquisitions. So, I was expecting a figure that will force consolidation in the sector. “I think GH¢800 would have forced consolidation in the banking sector”, Mr. Thompson said.

He said the country is too small to have about 35 banks operating in it, stating that the country needs strong banks.

“It’s about coming together to form a strong unit. We need just about five or six banks in Ghana. It better to have 5 strong banks than having 35 banks.

Mr. Thompson was of the believe that the Central Bank will not achieve its purpose with the GH¢400 million capital requirement increase.

“I suspect that more than 20 banks will be able to meet the capital requriement which I think the 20 is too many. The designed effect will not be achieved with the GH¢400 million figure”.

The Bank of Ghana on Monday announce the new minimum capital requirement of GH¢400 million for banks in operating country as part of a holistic financial sector reform plan to further develop, strengthen, and modernize the financial sector to support the government’s economic vision and transformational agenda.

Banks would be required to meet the required minimum capital through a fresh capital injection, capitalization of income surplus, a combination of fresh capital injection and capitalization of income surplus.

All existing banks have up to December 31, 2018 to meet the new minimum paid up capital requirement.

Source: Cephas Larbi

 

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