Number of banks to hit 37

Despite calls for banks to merge in order to build their capacity, Citi Business News has gathered that four more banks have applied to the Bank of Ghana(BoG) awaiting approval from the central bank to commence operations.

Out of the four, two are new banks applying to operate in the country, while the remaining two are Savings and Loans companies.

If approved, the number of banks in Ghana will reach 37, making Ghana one of the countries in the sub-region with the highest number of banks.

The Bank of Ghana last year granted licenses to Ghana Home Loans , Sovereign Bank, Omni Bank and Premium Bank to commence operations as  commercial banks, pushing the number of banks to 33.

Even though calls for mergers are rife, Banking Consultant Nana Otuo Acheampong believes the growing number of banks is good and will engender competition.

According to him, it will be counter-productive if any attempt is made to put a ceiling on the number of banks that can operate in the country.

He stated that a free market is good enough to determine banks that may want to merge in the future due to competition.

“Competition is part of the free market economy. In fact competition is an advocate of free market because the more competitive industry is, the more we can see free market,” he said.

He contended that, placing a cap will create a market where a few banks control the industry which may not inure to the benefit of consumers.

“If we allow that, we may have an oligopoly where you get a few institutions controlling the industry,” he said.

He was however of the view that it is important for banks to build their capacity to undertake high budget project.

“My only concern is in terms of the bank's ability to undertake big ticket deals like oil, gas and so on. And the banks we have now none of them singularly is big enough to do that so if by consolidating that's okay but we must not imposed restrictions on the industry,” he said.

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By: Lawrence Segbefia/citibusinessnews.com/Ghana