Dep. Finance Minister designate warns against cap on banks

A Deputy Finance Minister designate, Charles Adu Boahen has warned against capping the number of banks in the country.

Calls for a cap on the number of banks in the country have increased following the rising number of banks in the country.

There are currently 33 banks operating with the number expected to rise to 35 by the end of this year.

Proponents for a cap on the number of banks in the country have argued that despite Nigeria's population of over 189 million people, the Central Bank of Nigeria has allowed only 26 banks to operate, while South Africa, which has a population of over 55 million people, operates about seven banks.

But answering questions from law makers during his vetting, the Deputy Finance Minister designate Charles Adu Boahen stated that capping the number will go against Ghana’s free market system.

“I don't believe that you should restrict the number of banks as far as owners meet the criteria that are required to open a bank. I think that you will be restricting free market if we did that. However, I think that maybe the requirements for having a bank should be looked at. Nowhere in the requirements do I see a nationwide coverage requirement so where as a minimum number of chequing accounts or saving accounts that you should open or have as a bank,” he stated.

Mr. Adu Boahen however argued that the regulators of the banking industry should review the conditions that qualify commercial banks as universal banks.

In his view, the current regime defeats matching lenders to borrowers in the financial space.

“So you can have a bank that will set up and meet the capitalization requirement and have maybe five branches and say they are a universal bank. If you do that there is no way you are going to deepen financial intermediation and get your branches all over the country.”

The Deputy Finance Minister designate further appealed to the Bank of Ghana to ensure banks open up their networks to various parts.

“So I think that as part of the requirements if I was the Governor of the bank of Ghana [which I'm not] would be to have a nationwide branch network as one of the requirements where every city or town that has a certain population would be required to have a branch to qualify to be a universal bank.”

Arguments for less banks
A Financial Analyst and Managing Director of Sam Bed Financial Consult, Mr. Sam Bediako-Asante is of the view that the Bank of Ghana must take measures to cap the number of banks through compelling policies.

“At the moment I think with the latest licensing I think they are about 33 banks, I am thinking that with this there should be consolidation, mergers and acquisition so that at most we can have just about 15 banks in Ghana , very big ones that can help our business community,” he said.

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By: Vivian Kai Lokko/citibusinessnews.com/Ghana