The Council of State has urged banks that cannot meet Bank of Ghana’s new minimum capital requirement to consider merging.
In a meeting with the Bank over a petition submitted to President Akufo-Addo by indigenous banks struggling to raise the new GHS400 million capital the Council of State unanimously supported the decision of the Central Bank.
Per the petition to the President, the local banks said the current increase in the minimum capital requirement from GH¢120million to GH¢400million timeline is too short for them to comply
"If the duration is not extended sufficiently, its attainment by the indigenous banks could lead to a wholesale of the indigenous banks to foreigners. Such a situation will put the control of the banking industry in the hands of foreigners which could have future negative consequences on the economy particularly in the provision of credit to the agricultural sector and the informal sector in general," portions of the petition stated.
According to the Bank of Ghana, the upward adjustment of the capital requirement forms part of a holistic reform plan to further develop, strengthen and modernize the financial sector to support economic development.
Meanwhile, after meeting with the Governor Bank of Ghana, Dr. Ernest Addison, the Council of State said the measures instituted to ensure prudence in the banking sector is a step in the right direction and called on the Bank of Ghana to intensify its public engagement.
“Ultimately, depositors’ interests must be protected at all times and the public needs to be assured to boost confidence in the banking sector,” acting Secretary to Council, Peace Okantey said in a release.
The Council of State is convinced that mergers will enable the indigenous banks to compete favourably and ensure sanity in the banking sector.