According to the regulator the Bank of Ghana (BoG), it is almost through with the required engagement with all the players in the banking industry, therefore, it is likely to announce a new minimum capital requirement for the various banks by September.
Mr. Raymond Amanfo, Director of Banking Supervision, Price WaterhouseCoopers, said the capital review would be done in a way that would ensure that, it would relevant for all the commercial banks.
“We are looking at a level of capital that would not result in an overcapitalization or something that would be injurious or irrelevant for any bank,” he indicated.
Mr. Raymond Amanfo was speaking at the launch of the 2017 Ghana Banking Survey Report, on Thursday 9 August, 2017 at the Kempinski Hotel in Accra.
According to him, when it comes to the amount that the Bank of Ghana is likely to settle on, there are a lot of proposed amounts from the industry players and even analysts.
When others are saying it could go up to ¢250 million, ¢300 million or even ¢500 million, Mr Amanfo says, he wouldn’t rule out any of these proposed amounts being put out.
Giving a little background details of the capital requirements, Mr. Raymond stated that, in 2003, the regulator issued a directive to commercial banks to increase their capital to a minimum of ¢7 million as part of measures to strengthen their capital base.
Where in 2008, it increased the capital to ¢60 million in a bid to make the banks more resilient against unexpected losses.
But the BoG later on proposed ¢120 million for new entrants, and afterwards asked the existing banks to increase their capital to that same level.
In February 2017, the BoG further gave some indications of raising the levels again.
By the accounting firm, PriceWaterhouseCoopers, in real terms, the minimum capital of ¢60 million has significantly eroded as the cedi to dollar parity has declined from less than 1 to almost 4.5 times, thus, the need for this review.
“The Central Bank would also start with the implementation of Basel II for commercial banks in the country from next year.
The Basel II is an international business standard that requires financial institutions to maintain enough cash reserves to cover risks incurred by operations.
From next month, we will start sharing with these banks the various standards for measuring risk in the banking sector ahead of the implementation of Basel II.
The Basel accords are a series of recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision.” Mr. Raymond Amanfo explained.