Business News of Wednesday, 20 December 2017
Ghana’s Banking sector may experience some stability due to the decision of the Bank of Ghana to ban the licensing of new banks in 2018, Banking Consultant, Nana Otuo Acheampong has said.
According to him, the move will allow the Bank of Ghana space to clean the banking system while the door is shut, to strengthen existing banks before others are permitted to operate.
The Governor of the Bank of Ghana, Dr. Ernest Addison last week Friday announced that the central bank will not license new banks in 2018 to allow the regulator rationalize the banking system to ensure efficiency.
Endorsing the move, Nana Otuo Acheampong stated that there is the need to stabilize the industry after the collapse of UT Bank and Capital Bank, before new entrants are allowed.
He argued that the move does not defeat the concept of Free Market, since the central bank has a responsibility to stabilize the banking industry and protect depositors’ funds.
“The beauty of Free Market always works well when we identify an externality and then you solve it. What is happening now is working on an externality, in that, the system hasn’t work the way Free Market would like it to work. So the intervention is timely, the intervention is good, the intervention will be able to stabilize the system before we open it up again for more entrants to come in,” he stressed.
He explained that the governor was sending a clear signal that the regulator is ready to take decisions that will strengthen existing banks to boost economic development.
“So the announcement is to say that, let us consolidate on what we have to get the terrain well-structured, then we can open the flood gate for new ones to come in,” he maintained.
Nana Otuo Acheampong, who is also a Principal Consultant at the Osei Tutu II Centre for Executive Education & Research was hopeful the central will lift the ban once the regulator achieves the purpose imposing it.