Banking Sector Received GH¢1.5bn Fresh Capital

Dr Ernest Addison, BoG Governor

banking sector received about GH¢1.5 billion in fresh capital last year as
banks moved to meet the Bank of Ghana (BoG)’s December 31, 2018, deadline to
meet the minimum capital requirement.

A PwC survey,
published recently which made this known, said the BoG’s directive to the banks
provided three sources of meeting the GH¢400 million minimum capital
requirement. The banks could seek fresh capital; capitalize from their reserves;
or a combination of the two sources.

But the 2019 PwC
Banking Survey published last week revealed that banks injected fresh capital
amounting to GH¢1.5 billion into their operations to meet the BoG directive.

“Sources of fresh
capital injection included equity from parent companies as well as funds from
other private investors. Some banks refrained from paying their shareholders
dividend for the year to shore up their reserves to meet the GH¢400 million
requirement,” the survey said.

Thirty-six per
cent of bank executives interviewed- mentioned that they had secured the
minimum capital through a hybrid of reserves and injection of fresh capital,
while 18% secured it through fresh capital injection only.

The PwC survey
sought the views of bank executives – chief executive officers, chief finance
officers, chief risk officers, chief operation officers and heads of strategy in
Ghana- through interviews and questionnaires carefully designed to elicit views
on the impact of the central bank’s reforms on their business.

According to some
bank executives, the increase in the stated minimum capital is necessary and
crucial in unlocking opportunities for players in the sector. They believe now,
that banks have a levelled playing field and are in a position to partake in
bigger ticket transactions that hitherto were not possible or were the preserve
of a few international banks. An example is government’s syndicated loans.

Further, the
increased capital, coupled with an increase in the value of the single obligor
limit, on the back of increased net worth of banks, following the injection of
additional capital, puts banks on a good trajectory to explore lending
opportunities to especially corporate clients. – Citinewsroom