Papa Kwesi Ndoum’s GN bank has been downgraded to a financial savings and loans organization with the aid of the bank of Ghana after it did not meet the new GHC400 million minimal capital requirement.
Also, the conventional banking licenses of Heritage and Premium banks were withdrawn with the aid of the Central financial institution and had been merged with the Consolidated financial institution of Ghana (CBG) through the banking regulator Bank of Ghana.
According to the Central Bank, 23 banks were able to recapitalize after the December 31 cut-off date. Out of the quantity, there have been three mergers; they may be Energy Bank and First Atlantic, OmniBank and Sahel Sahara, FNB and Ghana Home Loans Bank.
The Governor of the Central Bank Ernest Addison additionally introduced at a news conference presently ongoing in Accra that some five banks are going to benefit from a GHC2 billion bailout from Ghana Amalgamated restrained. These banks are Universal Merchant Bank, Abd, NIB, Prudential, and the Merged OmniBank and Sahel Sahara Bank.
Full text: Bogs replace on Banking Sector Reforms
Ladies and Gentlemen, while the modern-day Management of the Bank of Ghana took workplace in early 2017, the banking sector was confronted with many demanding situations. We inherited a monetary device which became beneath an extensive state of distress, with banks that had been no longer assembly the capital adequacy requirement and others whose capital changed into eroded with excessive non-acting loans. Some of these banks had been bankrupt and illiquid, others had been solvent but illiquid.
This situation changed into largely a result of poor corporate governance, fake economic reporting, and insider dealings. The Bank of Ghana had inside the past endured providing liquidity assist to these failing banks, without addressing the underlying troubles that caused the illiquidity and insolvency of these establishments.
In short, the monetary system had reached a tipping point and we couldn’t have assumed commercial enterprise as common. The Bank of Ghana, consequently, embarked on a complete reform schedule, with the objective of cleaning up the world and strengthening the regulatory and supervisory framework for an extra resilient banking quarter.
As part of this reform exercise, the banking licenses of seven (7) insolvent banks have been revoked over the last 16 months. Steps have been taken to make certain that they exited the marketplace in an orderly manner.
Furthermore, the Bank of Ghana on 11th September 2017 issued the Minimum Capital Directive (BG/GOV/SEC/2017/19) by using which all prevalent banks had been required to increase their minimal paid-up capital to GHC400 million by means of 31st December 2018. Banks had been required to comply with the new minimal paid-up capital requirement via (i) a clean capital injection; (ii) capitalization of profits surplus; or (iii) an aggregate of sparkling capital injection and capitalization of profits surplus.
The Minimum Capital Directive became part of regulatory measures geared toward strengthening and making the banking region more resilient to shocks as well as to help reposition the banks to better guide the growing desires of the Ghanaian financial system. It becomes also the expectancy of the Bank of Ghana that the recapitalization exercising might help promote consolidation within the banking enterprise thru sustainable mergers and acquisitions together with more potent corporate governance structures and hazard control systems and practices.
UPDATE ON RECAPITALISATION EXERCISE
Following the recapitalization exercise that ended on the near of commercial enterprise on thirty-first December 2018, there are actually twenty-three (23) usual banks working in Ghana. These banks have all met the new minimum paid-up capital of GHC400 million. An agenda of banks and the way they’ve met the new requirement is connected as Annexure 1.
– Sixteen (16) banks have met the new minimal paid-up capital requirement of GH¢four hundred million specifically via capitalization of profits surplus and fresh capital injection.
– The Bank of Ghana has approved 3 (3) programs for mergers. Consequently, First Atlantic Merchant Bank Limited and Energy Commercial Bank have merged, Omni Bank and Bank Sahel Sahara have merged, and First National Bank and GHL Bank have merged. The three (three) ensuing banks out of these mergers have all met the brand new minimum capital requirement.
– Some non-public pension budget in Ghana has injected sparkling fairness capital in 5 (5) indigenous banks thru a unique purpose retaining enterprise named Ghana Amalgamated Trust Limited (GAT). In addition to the country-owned banks (ADB, NIB) taking advantage of the GAT scheme, the opposite beneficiary banks (the merged Omni/Bank Sahel Sahara, Universal Merchant Bank, and Prudential Bank) were selected via GAT on the basis of their solvent popularity and appropriate company governance. More details about the GAT scheme can be supplied by way of GAT and the Ministry of Finance.
To make certain that the capital supplied by means of banks certainly represents nice capital in the amounts required to fulfill the Minimum Capital Directive, the Bank of Ghana followed and carried out a rigorous capital verification process. In the technique, the Bank of Ghana has undertaken comprehensive due diligence on new buyers in banks and has tested the sources of a budget for the recapitalization. The verification system continues to be on-going and might be proven with the aid of external auditors of banks as a part of the 2018 outside audit
RECAPITALISATION AND RESTRUCTURING OF STATE-OWNED BANKS
Resources from GAT could be used to recapitalize the two kingdom-owned banks (ADB and NIB) to help force and promote long-time period sustainable financing for agricultural and industrial growth. The Government has notified the Bank of Ghana that it intends to restructure NIB through governance and management reforms as well as streamlining its business version to help refocus it as a bank to industrialization. To assist make sure that these reforms succeed, the Bank of Ghana has today appointed an guide for NIB, pursuant to segment a hundred and one (1) of the Banks and Specialized Deposit-Taking Institutions Act of 2016 (Act 930), to recommend control of the financial institution that allows you to assisting enhance the affairs of the bank. The Advisor will maintain office until in any other case suggested with the aid of the Bank of Ghana and will supply the Bank of Ghana with a status file on the financial institution in three months and as regularly because the Bank of Ghana can also require.