No license for new banks in 2018 – BoG

Business News of Monday, 18 December 2017

Source: citibusinessnews.com

2017-12-18

Governor of the Bank of Ghana, Dr. Ernest Addison

The Bank of Ghana (BoG) has given the strongest indication that it may not license new banks in 2018.

It is not clear if this is the first time the Bank of Ghana is considering taking such a decision, but according to the central bank, the move is aimed at creating space to strictly implement the new capital requirement of 400 million cedis in 2018.

Currently, there about 35 banks in the country.

Speaking at an event in Accra, the Governor of the Bank of Ghana, Dr. Ernest Addison explained that the decision is to prevent entry of new banks with low capital requirement.

According to him, the decision will afford the central bank time to carefully monitor financial institutions as most of them are expected to meet their new capital requirement next year.

“To rationalize the banking system to ensure efficiency, we are considering not licensing new banks, savings and loans, or microfinance institutions during the next year, as we implement the recapitalization plans of existing banks”.

He explained that “We should not allow the potentially insolvent banks to enter the industry, adding that “We need to manage entry to ensure that, down the line, we do not then have to manage exit as we did this year”.

Dr. Addison was of the view that the move will equip the regulator to adequately evaluate the financial sector to identify specific areas that require special attention to achieve government’s transformational agenda.

“This will help us to ensure solvency and stability in the banking sector at the end of the reform process,” he said.

He stated that the Bank of Ghana will also use the opportunity to announce a new licensing regime for the financial sector to protect customers’ deposits.

“The Bank of Ghana will introduce a new licensing regime that will align with the overall financial sector landscape to deliver a strong, solid, well capitalized, and geographically diversed financial landscape. That is the vision to support the government’s transformational agenda,” he assured.

Meanwhile, Dr. Addison has warned that the central bank will be tough on banks in complying with their corporate governance structure in 2018.

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