Ghana’s economy needs just about five well capitalised banks , Financial Analyst, Sydney Casely Hayford has said.
His comment comes days after the Bank of Ghana gave GCB Bank the go ahead to take over UT and Capital Banks to save them from collapse.
The Bank of Ghana announced that the takeover of the two banks became necessary “due to severe impairment of their capital,” and media reports suggest there are seven other banks that are also distressed at the moment.
Speaking on Citi FM’s News Analysis Programme, The Big Issue, Mr. Hayford said the challenge of indigenous banks collapsing due to insolvency will be non existent if Ghana had fewer banks.
He believes “fewer banks with bigger capital bases” will always ensure “bigger and better lending.”
Prior to GCB taking over Capital and UT banks, there were a total of 36 banks operating in the country, with 19 of them being indigenous.
Many who however believe the number was too huge have heightened calls for the Central Bank to tighten regulation by cutting down the number.
8 banks on the verge of collapse – Bawumia
In 2016, the then running mate of the flag bearer of the New Patriotic Party’s, Mahamadu Bawumia had warned that eight banks in Ghana risked collapse due to the continuous increase of bad loans on their books and the fragile economy.
He said these eight banks were identified to exhibit significant weaknesses with capital adequacy ratios of below 10 percent and some below 5 percent and nearing collapse so it is a real problem.
Dr. Bawumia also made reference to the Bank of Ghana’s first financial stability report for 2016, which revealed that bad loans on the books of commercial banks in the country increased by 14.9 percent to GHc 4.52 billion in 2015 against the GHc 2.72 billion recorded in 2014.
This was after the Bank of Ghana, in its first financial stability report for 2016 revealed that bad loans on the books of commercial banks in the country increased by 14.9 percent to 4.52 billion cedis in 2015 against the 2.72 billion cedis recorded in 2014.
The central Bank earlier admitted the growing spate of nonperforming loans on the books of banks is the key risk facing the banking sector.
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