Domestic debt exchange compounds problems of rural and community banks

The government of Ghana’s domestic debt exchange programme has compounded the already fragile situation of many rural and community banks (RCB) in the country.

Already, RCBs are feeling the serious effects of funds, which have been locked up in some financial institutions regulated by the Securities and Exchange Commission, and the domestic debt exchange has compounded the problem.

Dr Toni Aubynn, Chairman of the Board of Directors of ARB Apex Bank, stated this at the opening of the 21st annual general meeting of the ARB Apex Bank.

According to him, the rural and community banks held significant funds in government related bonds which had been exchanged for new holdings under the debt exchange programme.

He, however, said the ARB Apex bank would continue to engage the government and the regulators to help salvage the situation to ensure improvement and sustainability in the rural banking industry.

Dr Aubynn said the rural banking sub-sector recorded some improvements last year.

Profit before tax grew by 44.6 percent from GH¢113.3 million recorded in 2021 to GH¢164.0 million as at December 2022.

Again, total assets grew by 25.6 per cent year-on-year from GH¢6.7 billion to GH¢8.4 billion at the end of December 2022.

Deposits also rose to 25.4 percent from GH¢5.9 billion in December 2021 to GH¢7.4 billion.

Loans and advances also recorded an increase of 18.2 percent from GH¢2.2 billion to GH¢2.6 billion in 2022.

Dr Aubynn said RCBs had approved the Apex bank’s strategy to raise additional capital of GH¢25.0 million over five years with GH¢5.0 million annually,

This would help boost capital base to reduce operational bottlenecks.

With this, he said paid up capital of the bank had recorded growth from GH¢9.6 million as at December 2022 to GH¢10.9 million as at June 2023.

He assured shareholders that, the bank would pay dividends to them as soon as the restrictions on debt exchange programme were relaxed.

Mr Alex Kwasi Awuah, Managing Director of ARB Apex Bank, announced that, the much-awaited financial Sector Development Project (FSDP), under which the anchor mobile Agency and internet banking solutions were to be delivered was gaining momentum.

The internet banking application he said, shall be ready by the fourth month of 2024.

This would bring delight and convenient banking to customers and a major turnaround in the fortunes of the RCBs.

He called on shareholders and all customers to stick to them to enjoy better fortunes soon.

Source: GNA