Banking Reforms Will Restore Confidence - Banking Consultant

By Kingsley Asare

A Banking Consultant, Nana Otuo Acheampong has stated that reforms being embarked on the Bank of Ghana (BoG) will help restore confidence in the banking industry.

He said averred that the recent banking crisis had dented the confidence Ghanaians had in the banking industry, and said efforts must be made to restore the confidence people have in the banking industry.

"The happenings within the seven collapse banks had dented the confidence that people have in banking, and this is not an underestimation at all, is a reality," he said and lauded the BoG for the banking reforms it had embarked on, saying the reforms would help build a strong, vibrant and liquid banking industry.

Speaking in an interview with the Times Business on the recent banking crisis, Nana Acheampong said the new Minimum Capital Requirement (MCR) directive of the BoG which would take effect by the end of the year would enhance the financial capacity of the banks in the country, especially the local banks to finance big ticket projects.

"The recapitalization which will take effect from January 1, 2019, will make the remaining banks - 20 or 22 strong, have a minimum capital of GHc400 million and be able to do big ticket projects," he said, pointing out that "this is one way of giving reassurance to the people that the banking industry is still strong."

Nana Acheampong intimated that the introduction of the Capital Requirement Directive (CRD) that was a risk-based system would compel banks to submit their capital adequacy report and those who fall below 13 percent would have to make it up to the 13 percent, the new capital adequacy ratio.

"The regulator has assured us that henceforth they have also to turn over a new leaf. They admit that they fell asleep on the job a little bit, what they termed regulatory forbearance, and were too soft on people and that can be blamed on what has happened and going forward, they had set up an Ethical Office within the BoG and they are going to make that their people go on regular training to boost their capacity so that they will be able to do regulation as it is supposed to be," the Banking Expert said.

He said is the introduction of Act 931, the Ghana Deposit Insurance Act, which is expected to kick off in the first quarter of 2019, would give some modicum of assurance to small and vulnerable depositors that if something went wrong with the regulated institutions they saved with, their deposits would not be lost.

"So with these four pillars confidence is being restored and so we are pleading with people that this moving of money from Ghanaian owned banks to the foreign banks should cease. We are not saying that people should not patronize the foreign owned banks, that is not at all because over 95 per cent of their staff are Ghanaians, so they are offering jobs but equally we also need Ghanaian owned banks to be in the system," the Banking Consultant said.

UT and Capital banks last year collapse due to liquidity challenges and early this year BoG had to consolidate five local banks also due to liquidity problems.

Read Full Story