Following the Bank of Ghana's intention to increase the minimum capital for universal banks from the current GH¢7.0 million to between GH¢50-60 million, the Central Bank says it has begun preparing an active consultation document that will soon be issued out.
According to the Governor of the Bank of Ghana, Dr. Paul Acquah, his outfit is working on the modalities with regard to the capitalization plans in order to kick-start the programme on schedule.
The Central Bank in November last year announced its intention of increasing the minimum capital requirement of banks, a mechanism which is set to take place by the middle of next year.
It requires banks and deposit-taking non-bank financial institutions to submit capitalization plans by the end of June 2008.
However, the Association of Indigenous Banks including the Agriculture Development Bank, Cal Bank and Unibank wrote a letter to the Central Bank protesting against the decision, saying it could cause problems for the banking sector when it is implemented.
The letter proposed a spread of the recapitalization process over seven years.
Dr. Acquah told journalists that the planned capitalization programme would enable banks to take part in bigger transactions.
“What is necessary for the banks is to recapitalize in order to support the economic growth of the country. The financial sector continues to grow and thus there is the need to have a strong capital base in order to compete with colleagues on the African continent,” he added.
According to a statement from the Bank of Ghana, submission of capitalization plans would guarantee continued access to the settlement and primary dealership systems.
After December 2008, participation in the settlement system would be restricted to institutions that have met the capital requirements.
It further stated that to ensure an orderly consolidation, the banking system would allow for lower tier banks after December 2008 so that banks that do not meet the capital requirements will belong to the lower tier.
It would be recalled that the Central Bank of Nigeria in 2004 increased the minimum capital requirement of banks from two billion Naira (US$14.5 million) to 25 billion Naira (about US$ 181million.
By Charles Nixon Yeboah
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