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BOG to Sanitize Banking System

The Bank of Ghana has announced its readiness to ensure the banking system is sanitized for efficient and effective financial intermediation.

A Senior Researcher at the Central Bank, Christian Ahortor, said the Bank of Ghana is aware of some challenges the banking system is facing and assured their readiness to assist in solving them.

“There are some notable challenges to effective intermediation of the banking system. This include high Non-performing loans and concentration risks. The high exposure of the banking system to the energy sector is partly to blame for the high non- performing loans which reflect in high risk premium that feeds into high lending rates banks.”

According to him, although there is usually some lags in the response of market rates to the policy rate adjustments, the slow response of lending rates observed in their case is underpinned by the Non-performing loans of the banking system.

He stressed that government is committed to float GH¢10 billion energy bonds and also implement the Energy Sector Levies Act (ESLA) account to help in defraying the energy sector indebtedness to the banking sector.

He made this statement at a conference organized by Policy Initiatives for Economic Development in Accra, during a discussion on the emerging issues and challenges facing the financial sector.

Minimum Capital Requirements

Mr. Ahortor assured that the Bank of Ghana will assist local banks when it comes to the mergers and acquaintances to enable them meet the minimum capital requirement.

“All banks have been given universal banking licenses so it is proper for all banks to meet the capital requirement. There will be no discrimination. We will assist the local banks by looking at the strength of those who want to merge.”

The Bank of Ghana recently increased the minimum capital requirement of banks which must be met by December 31, 2018.

The Chief Executive Officer of the Women’s World Bank, Mrs. Challotte Baidoo explained that non-performing loans as when the payment of interest have been capitalized or delayed.

According to her, the need for creating an asset management company to take over all bad loans in the balance sheet of banks, securitizations of non-performing loans and debt restructuring.

“Banks on the other hand can resolve their problem more intensively by applying some of the already known measures of debt restructuring. The most commonly used measure by banks is loan rescheduling.”

Source: Emmanuel Yeboah Britwum

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