Ghana Is Said to Triple Minimum Capital Requirements for Banks

ACCRA (Capital Markets in Africa) – The Bank of Ghana more than trebled minimum capital requirements for lenders as part of reforms aimed at strengthening the industry, according to people familiar with the matter.

Banks will need to set aside at least 400 million cedis ($91 million) in capital compared with 120 million cedis previously to meet their license obligations, the people said, asking not to be identified because an official announcement hasn’t yet been made. Lenders will be given until December 2018 to meet the requirement, they said.

Regulators had delayed the introduction of the new rules to allow nine of its more than 30 lenders time to bolster their capital levels. The deposits and some assets of two of those banks, UT Bank Ltd. and Capital Bank Ltd., were taken over by Ghana Commercial Bank Ltd. last month after they failed to meet the requirements. The rest either met or presented plans to attain the target, Governor Ernest Addison said on Aug. 14.

Banks are being forced to strengthen their balance sheets as the country tightens regulations. Policy makers have said that capital levels in the industry are too weak to support the government’s plans to boost lending and reignite an economy that expanded at the slowest pace in 26 years in 2016. The central bank expects that increasing capital requirements will spur mergers and acquisitions in the industry that will result in few, stronger lenders.

The phone of Bernard Otabil, a Bank of Ghana spokesman, was switched off when contacted for comment. Second Deputy Governor Johnson Asiama and Alhassan Andani, president of the Ghana Association of Bankers, didn’t answer calls seeking comment. Spokesmen for the Ghana Commercial Bank and the local unit of Ecobank Transnational Inc., two of the country’s largest lenders by value, didn’t answer calls seeking comment.

Source: Bloomberg Business News