Exclusive: Duffuor writes to IMF – Bank of Ghana may extend December 2012 recapitalization deadline
The Bank of Ghana’s December 2012 deadline for banks to meet the minimum capital requirement of GH¢60 million may be extended as some banks still face some challenges, a document attached to a letter signed by Finance Minister, Dr Kwabena Duffuor and Dr. H. A. Kofi Wampah, Deputy Governor of the central bank to the International Monetary Fund (IMF) has revealed.
The letter obtained by ghanabusinessnews.com July, 20, 2012, dated June 26, 2012 and addressed to Ms Christine Lagarde, IMF’s Managing Director admitted that the recapitalization has been a remaining problem for some banks.
As at December 2011, only 16 of the 27 commercial banks licensed to do business in Ghana have so far raised the new stated capital requirement required by the regulator.
Text of the documents say “Some progress has been made regarding the re-capitalization of the remaining nine banks yet to achieve the GH¢60 million minimum capitalization. One bank has since met, while another is going through due diligence checks towards compliance.”
It adds “Five others have presented re-capitalization plans which are being monitored for implementation.”
“The remaining two banks may face challenges, and the BoG will put in contingency measures to deal with these,” the government document admitted but said “The possibility of public listing on the Ghana Stock Exchange remains an option open to under-capitalized banks.”
“Banks that choose this option (public listing), by spreading ownership and subjecting themselves to additional oversight by the GSE, could benefit from an extension of the deadline,” the document revealed but “this will be assessed on a case by case basis,” it adds.
The central bank issued new regulations in 2008 asking banks to recapitalized to the tune of GH¢60 million. Although foreign owned banks were given a one year period within which to meet the directive, domestic banks were expected to recapitalise to GH¢25 million by December 2010 and subsequently reach the GH¢60 million by December 2012.
The BoG, has over several times, insisted and reiterated that it will not extend the deadline.
Governor Kwesi Amissah-Arthur during the BoG’s 50th Monetary Policy Committee (MPC) meeting in Accra April 13, 2012 told reporters that no bank in the country will fail to meet the central bank’s minimum capital requirement by the December 2012 deadline.
According to Mr Amissah-Arthur, discussions with the banks who are yet to meet the requirement, suggests that they are all ahead of schedule in the recapitalization process.
“I don’t believe that any bank will fail to recapitalize because the discussions we are holding with them suggests that they are all way upfront ahead of schedule in the recapitalization,” Mr Amissah-Arthur said.
The governor said some banks are doing private placement and he [Amissah-Arthur] has been “receiving offers everyday from external banks that want to buy into Ghanaian banks”.
“On that score alone they will be able to make it,” he stated.
But some, according to Mr Amissah-Arthur, are looking for domestic solutions to this problem. “Some are looking for domestic solutions…so their default is that if everything else fails, they have offers from outside they can look at,” he said.
By Ekow Quandzie