Business

Regulation: Ghanaian consultant rates CBN high

A Ghanaian banking consultant, Dr Richmond Attuahene, has noted that a strong banking sector is not just about reducing the minimum capital requirement to make it possible for more banks to spring up. He said it was a sector that needs strict supervision by the regulator to ensure that the players comply with all the banking rules. His comments were in reaction to a promise by a former President of Ghana, John Mahama, to review downwards the minimum capital requirement needed before one can establish a bank in Ghana. He said: “It is not just about the minimum requirement, it is about robust supervision.

It is so much of strict enforcement of the laws. “Nigerian banking sector is far ahead of Ghana because not just anybody can be a board member. You need to have the experience, you need to have the understanding of the risks. “Banking is the highest gearing institution in the whole world. It means your minimum capital does not commensurate with the depositors’ money. “Banks in Ghana are using 400 million as reserves, but some are carrying a deficit of two trillion, so if you collapse the 400 is insignificant.”

In 2017, the Bank of Ghana raised the minimum capital requirements for banks from GHS200million to GHS400million. Analysts said this was to test the viability of the banks. The ones that were unable to raise the revenue were either merged or collapsed during the cleanup exercise.

Mahama said at the launch of the NDC’s manifesto on Monday September 7 that he would strengthen the financial sector by reviewing downwards the minimum capital requirement. However, speaking in an interview with Etornam Say on TV3’s New Day Tuesday September 8, Dr Attuahene said the sector did not just need the capital requirement to be reduced, rather, strict enforcement of the laws and supervision. While the former Ghanaian president is moving for a slash in his country’s minimum capital requirement, the Governor of Central Bank of Nigeria (CBN) , Mr Godwin Emefiele, last year, mooted the idea of raising the current capital base of Nigerian banks above the current N25 billion and N25 billion for national and regional operators respectively. Emefiele explained that the current capital base of the banks was no longer realistic, principally because of the massive devaluation of naira since the benchmark was set about 11 years ago.

 

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