Recapitalisation: Number of non-compliant Banks worrying

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ECONOMIST Dr Lord Mensah has described as worrying the number of banks that are yet to meet the minimum capital requirement.

According to him, the development shows how most of the banks are struggling to meet the deadline by end of year [2018].
“It is quite disappointing because banking operations is basically sourcing for funds and uses of funds,” Dr Mensah said.
“So if it turns out that by the regulator raising the bar you are not able to raise money to that level in a form of equity, then it gives the signal that our banks are quite weak in terms of how they raise money in our economy,” he added.
With four months to the December 2018 deadline, 16 banks are yet to announce their position on meeting the GH¢400 million minimum capital requirement.
According to the Bank of Ghana, six banks have already met the target with seven others undertaking various measures to recapitalize.
Sahel Sahara Bank and Omni Bank have agreed to consolidate their operations into one entity in a merger deal.
The consolidation of the two banks is to create a stronger bank that can meet the BoG’s new minimum capital.

Dr Mensah maintains that the fact that most banks may not have declared their position on attaining the requirement, spells doom for the banking industry as it is quite risky.
“So basically, their involvement in the banking space is very minimal which is for me quite risky. That is why possibly the regulator see it to be more or less an exposure and keep on shifting the goalpost in terms of capital requirement”.
Dr Mensah however told Accra based Citi FM it is likely most banks will merge to be able to meet the requirement set by the Central Bank.
A bank’s inability to meet the requirement will mean it could lose its license or get its status reduced to a Savings and Loans company.
Already, seven banks have had their licenses revoked over several infractions.
The latest crackdown which affected five banks led to the creation of the Consolidated Bank.

Source: The Finder

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