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THE Chartered Institute of Bankers (CIB) is urging the Bank of Ghana (BoG) to avoid a blanket implementation of its policy to get banks in the country to recapitalise.
According to the Institute, the segmentation of banks will allow lower tiered banks that have met the initial threshold to serve particular sectors of the economy with innovative products and services whilst banks with increased capital base (higher tiered banks) finance bigger projects.
President of the Institute, Rev. Mrs Patricia Sappor said such an approach will help the country to have a banking sector that supports small, medium sized and large banks that are all playing various roles in the economy.
The regulator should consider a tiered recapitalization policy, with tiered capital targets to enable lower tiered banks meet the recapitalisation requirements.
She maintained that lower tiered banks had to be assisted with a clear policy so that they are not left out of the banking system.
A policy to stagger bank capitalization in terms of the types of banks and their corresponding target markets is critical, timely and reasonable, she submitted.
The CIB asked for more time from the BoG to afford banks adequate preparation to recapitalise and to do so effectively.
“The Central Bank should give the banks ample time to explore ways of meeting the new capital requirements,” Rev Sappor stated.
The CIB president urged banks to continue to develop winning strategies for capitalization, stating that such strategies should ensure the growth of shareholder value, market share and profitability.
“Banks should continue to strengthen their balance sheets over the next couple of years to enhance the pace of value creation in the interest of shareholders so that shareholders will be ready to invest more in their respective banks,” she added.
Turning its attention to Ghana’s oil and gas sector, the Institute noted that banks which would like to recapitalize to take advantage of the big ticket oil and gas sector must increase their capital base in relation to the size of the projects to be financed.
“Such a policy will go a long way to create a fair and competitive ground for all classes of banks in the country,” Rev Sappor maintained.
The Institute hoped that the regulator will maintain and review the capitalization policy from time to time as has been the practice to revitalize and stabilize the banking sector.
The BoG as part of its universal banking resolution which started in 2003 issued a new directive in 2008 that required all the twenty six banks in Ghana as at 2009, to operate within a certain minimum capital requirement. This was aimed at dramatically improving the core capital of the industry from a previous minimum per bank capital of GH¢7million to GH¢60 million.
The new banking regulations required all domestically controlled banks to achieve a minimum core capital of GH¢25 million by December 2010 and subsequently meet the GH¢60 million capital reserve by December 2012. Alternatively, foreign-owned banks were given a year, ending 2011 within which to meet the paid up capital reserve of GH¢60 million.
Source: Isaac AIDOO || The Finder