Minimum Capital: BoG Issues Guidelines on Mergers & Acquisitions

The Bank of Ghana has disclosed that it is working on guidelines for potential mergers and acquisitions that may emerge following the recapitalization of banks in the country.

The central bank explains that this also forms part of a series of new reforms aimed at building a strong financial sector.

Commercial banks are expected to increase their minimum capital to four million cedis (400,000,000) by 31st December this year.

The local banks argue that the December 2018 deadline is disingenuous to them as it places their counterparts, foreign banks at advantaged position compared to them.

Though the Bank of Ghana is resolute with the December 2018 deadline, its Second Deputy Governor, Mrs.  Elsie Awadzi says the regulator will work in the best interest of the financial sector.

“We will operationalise the Deposit Protection scheme established under the Ghana Deposit Protection Act 2016 to provide further protection for depositors’ fund. Our plan is to get this in place by early next year. A lot of steps are currently already in place and we will ensure this is implemented without any further delay.”
Mrs. Awadzi added, “We will also ensure a smooth transition to the new capital requirement by December 2018; we will facilitate banks’ mergers and acquisitions and other transactions by issuing some guidelines on the process.”

The BoG boss made the remarks at a stakeholder engagement with banking industry players on building a robust financial sector.

Speaking at the same event, the President of the Ghana Association of Bankers and Managing Director of Stanbic bank, Alhassan Andani urged a review of the credit culture in Ghana.

He tells Citi Business News that a complete overhaul of the current credit offering regime should help banks correct their non performing loans and deepen growth.

“When banks issue out loans to governments and the private businesses and they pile up, the economy will grind to a halt…good credit culture reinforces itself; once the deposit comes in as a clean flow and the payment follows the same trend, then the economy starts to grow. But with shortfalls such as the energy sector legacy debts, the banks will suffer,” he stated.