Governor of the Bank of Ghana, Dr. Ernest Kwamina Yedu Addison, has said that the state of indigenous of banks is gradually improving.
According to him, the banking system is well capitalized and profitable.
Addressing the press after the Monetary Policy Committee meeting, he said, the capacity of banks in the country has extensively improved six months down the line.
“If you look at the average on this today, we are reporting a capital adequacy ratio of 19% from around 15% or 16%, so there is a lot going on. The banks are rebuilding their capital buffers; the banks are becoming more resilient compared to what the situation that we had six months or seven months ago.
“And that is the state of the banking system” he emphasized. But was quick to add that, although there are improving, there are few challenges.
“The capital buffers of the banks in question are increasing, and we should respect that to broadly seeing a stronger banking system by the end of the year,” Dr. Addison explained.
The Bank of Ghana governor earlier last year announced that nine banks were in distress and were likely to be liquidated.
The Central Bank later said liquidation of UT and Capital banks became necessary in order to protect depositors ‘funds owing to the “severe impairment” of their capital.
However, reports from the Bank of Ghana’s “Monetary Policy Committee” suggest that the capital buffers of the banks continue to increase towards meeting the new 400 million requirement of the Central Bank. A welcoming information that tends to build the confidence level of depositors.
Dr. Addision stated that as part of the recapitalization process for 2018, the Central Bank has initiated a new guideline to help improve governance in the banking system, particularly the indigenous banks.
He suggested a consolidation between the smaller indigenous banks to enable a more formidable front.
He also said the micro-finance sector is bedeviled with a lot of challenges, saying, “the micro-finance companies are behaving like they are banks”. According to him, they are doing things they are not supposed to do.
To that effect, the Central Bank intends to increase the capital requirement for the micro-finance institution as part of a road map guideline to consolidate the sector.
