The Council of State has advised indigenous banks which cannot meet the new GH₵400 million minimum capital requirement of the Bank of Ghana (BoG) to enter into mergers in order to compete favourably and ensure sanity in the banking sector.
The BoG in September 2017, announced the increase of its minimum capital requirement for commercial banks to GH₵400 million from a previous GH₵120 million.
This represents about 233% increase over the previous minimum capital requirement and the banks have until December 2018 to meet this new requirement.
By this, the banks in the country will require to set aside GH₵400 million in capital to be supervised by the central bank before being allowed to operate.
Following the announcement, there has been mixed reactions from players in the banking sector, especially, the indigenous ones.
While some say they are putting measures in place in order to meet the new minimum capital requirement, others are of the view that the demand was too much and will overburden their business.
Critics of the central bank say the demand for GH₵400 million minimum capital requirement is an attempt to kill indigenous banks and pave the way for foreign banks to take over the banking sector in the country.
There are about 31 commercial banks operating in the country.
On Monday, April 9, 2018, some Managing Directors and Chief Executive Officers of local banks in the country met President Nana Addo Dankwa Akufo Addo in their bid to push the deadline for recapitalisation for local banks from December 2018 to 2022.
In a letter to the President and signed by all the Managing Directors and Chief Executive Officers of the local banks, the local banks said they were in a better position to recapitalise up to GH¢170 million by the end of 2018, GH¢220 million by the end of 2019, GH¢280 million in 2020, GH¢340 million in 2021 and GH¢400 million in 2022.
The said meeting was inconclusive.
However, a statement from the Council signed by its Acting Secretary, Mrs. Peace A. P. Okantey, said the only solution to save the situation was for the local banks to merge.
The decision of the Council was taken at a meeting held on Thursday, April 12, 2018, after meeting the Governor of the Bank of Ghana to discuss topical issues in the banking sector as well as a petition that was sent to the President of the land and copied the Council of State.
While supporting measures so far taken by the Bank of Ghana to ensure prudence in the banking sector, the Council also urged the central bank to broaden its avenues for public engagement.
It also advised the central bank to ensure that the interest of depositors is protected at all times, while assuring the public to boost confidence in the banking sector.