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FIDELITY Bank, a Ghanaian-owned bank, has met the new minimum capital requirement of GH₵400 million after shareholders of the bank passed a special resolution.
The resolution was passed to move GH₵50 million from its income surplus and to add it to the existing stated capital GH₵54 million on November 30.
Edward Effah, the Chairman of the Fidelity Bank, at a news conference in Accra on Friday, explained that the bank had about GH₵264 million minimum of the capital requirement even before this year.
“In April 2018, GH₵20 million was moved from its income surplus and added to this figure. In October, GH₵70 million was brought in as fresh capital before the GH₵50 million resolution on Friday, November 30, to increase the stated capital to more than GH₵400 million,” he explained.
According to him, Fidelity Bank’s financial standing over the years has been strong, adding the bank did not find raising additional capital a challenge.
Effah said the strength of Fidelity Bank in a challenged environment was from its capital, strong liquidity position, earnings quality, quality of management and staff, sound risk and corporate governance principles.
Fidelity Bank’s capital strengthened the bank by supporting its operations, acting as a cushion to absorb unanticipated losses and providing protection to uninsured depositors and debt holders in the event of liquidation.
He said that bank ranked the first among the top 10 banks with Capital Adequacy Ratio of 27 per cent at December 31, 2017 and as at December 31, 2018, the Bank had a loan-deposit ratio of 27 per cent and a liquid ratio of 215 per cent.
He posited that the Bank didn’t need to raise its minimum capital requirement just to meet the Central Bank’s demand but also to grow its business.
Responding to whether the Bank would be comfortable if the Bank of Ghana(BoG)should further increase the capital requirement in the near future, Effah said: “We don’t envisage a significant increase in the capital requirement but we are ready as a Bank. We should always remember that these are good policies for banks, they are not there to obstruct banks, but to make them more prudent and safer.
“I think the Central Bank has done well in the last two years in making sure that the financial sector is stronger and that banks have adequate capital to do their businesses with right corporate governance, and that people who run banks are fit and proper”.
The chairman noted that the Bank of Ghana should be recommended for protecting the ordinary man on the street, salaried workers and pensioners who saved their monies in banks, adding that “nobody would be willing to keep his or her money at a bank that is not secured”.
Effah reiterated that if the state does not support the BoG, it would have repercussions on the economy because every strong economy has strong banks.
He said another reason for the Fidelity Bank’s success was its partnership with International financial entities, saying, “banking is not a local business but international and to be a strong bank, you need other banks to work with”.
He, therefore, advised all financial institutions to partner foreign financial entities for a platform to learn and employ new and better skills and knowledge to enhance their growth.
Source: John Elliot HAGAN || The Finder, Accra