Banks in Ghana must reduce risk exposure – BoG

The Bank of Ghana (BoG) is urging existing commercial banks in the country to reduce their risk exposure to match up with their capital.

According to the central bank, it will no more issue any new directive to existing banks regarding their minimum capital requirement.

“It’s their choice to increase their capital if they want to do big ticket business. No more directive from the central bank,” Mr Millison Narh, a Deputy Governor at BoG told reporters October 22, 2013 in Accra.

Mr Narh indicated that the latest directive from the central bank is for the new banks coming in to meet new minimum capital requirement.

“If you don’t want to host that much capital, then all you need to do is to reduce your exposure. So your risks should just be consistent with the capital that you have,” said Mr Narh after the inauguration of the Bank of Ghana Association of Chartered Banks.

The BoG in August this year announced an upward revision of the minimum capital requirements for new industry entrants.

The central bank raised the minimum capital for new commercial banks to GH¢120 million from GH¢60 million

Mr Narh who made the announcement then at the 32nd Annual General Meeting of the Ghana Association of Bankers (GAB) in Accra August 15, 2013, explained that “Developments in the macro-economic front have necessitated the need for the Bank of Ghana to review the minimum capital requirements for new industry entrants.”

He added “These increases are necessary in order to provide our institutions with the muscle to undertake big-ticket deals to support the growth of the private sector and to further serve as a capital cushion for absorbing unexpected losses that may arise in the normal course of business.”

All banks were able to beat the December 31, 2012 deadline when the minimum capital requirement was increased to GH¢60 million.

By Ekow Quandzie