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Ghanaian Banking Sector Improves Stability As Most Lenders Meet Governance And Capital Requirements

Ghanaian Banking Sector Improves Stability As Most Lenders Meet Governance And Capital Requirements

The Ghanaian banking sector is more stable than it was a few months ago following a process by the Bank of Ghana to improve the governance and liquidity of the country’s commercial lenders.

As part of a two-year Ghanaian banking sector cleanup, banks in the country were given until Dec. 31, 2018 to recapitalize to more than
$81.1 million or risk losing their licenses.

To meet the new capitalization requirements, the successful banks all managed to raise their holdings to at least $81.1 million, according to Bloomberg.

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Not all of the lenders met the requirements of the central bank, but two-thirds were able to comply.

The original 34 lenders that started the process were whittled down to 23 well-capitalized and compliant banks through a selection of agreements, mergers, amalgamations, takeovers and license withdrawals, according to Ghanaweb.

Ghanaian banking sector
Ghana Finance Minister Ken Ofori-Atta. Image – AP – Jose Luis Magana

Expensive Ghanaian banking sector revamp

The cost of the banking sector revamp was around $2.45 billion, with the Ghanaian central bank issuing that amount in bonds to save some of the banks involved, Bloomberg reported.


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Before the deadline was even reached, the central bank had revoked the licenses of seven banks which were deemed insolvent or embroiled in alleged fraudulent dealings, according to 3News.

Of the seven failed banks, the Ghana Commercial Bank took over Capital and UT in August 2017, while the remaining five were merged into the Consolidated Bank Ghana Limited in 2018.

In addition, Premium and Heritage banks had their licenses revoked and were merged with the Consolidated Bank Ghana Limited, according to Myjoyonline.

Another merger involved two of the original banks, with smaller institutions Omni Bank and Sahel-Sahara Bank joining forces, while a unit of South Africa’s FirstRand is set to take over GHL Bank Ltd.

A South African bank was also involved in the fate of the local unit of Bank of Baroda, an India-based international bank. It was liquidated at the beginning of January and its assets have been taken over by Stanbic Bank, the local unit of Standard Bank of South Africa, according to Pulse.

The Ghanaian banking authorities also decided to downgrade GN Bank Ltd‘s license after it was unable to meet the new capital requirement. This means that it will continue to operate as a savings and loan company, and not a fully fledged bank.

Finally, five of the banks that could not meet the new $81.1 million threshold but were solvent will receive support from a special purpose company set up as the Ghana Amalgamated Trust, Ghanaweb reports.

This company will be made up of private pension funds from across Ghana, and will assist the Agricultural Development Bank, the National Investment Bank, the merged Omni/Bank Sahel Sahara, Universal Merchant Bank, and Prudential Bank.