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BoG anticipates a robust banking system for 2019

botchway November 27, 2018
By Bernice Bessey    / 
all pix by Eric Owiredu       .
The Bank of Ghana (BoG) has anticipated a well-capitalised and robust banking system for 2019, due to efforts by banks to meet the December 31 recapitalisation policy deadline.
Although some banks are still struggling to raise the GHȻ400 million capital requirement, the Apex bank is certain that the future of the financial sector looks bright, with many banks at the edge of achieving their recapitalisation efforts.
In a firm posture, BoG indicated that despite the deadline for the bank recapitalisation remained unchanged by the end of 2018, it has monitored and worked with the banks towards their recapitalisation efforts.
Dr Ernest Kwamina Yedu Addison, Governor of the BoG, said this at the 85th Regular Meeting of the Monetary Policy Committee (MPC) and the last for the year, in Accra.
“We are happy to note that many banks are close to meeting the new minimum capital requirement and a few are concluding discussions on mergers. We will communicate the outcome when the exercise is completed.
“We expect 2019 to commence with a well-capitalised and robust banking system with no weak institutions,” he said.
He also hinted that the BoG has been monitoring the savings and loans and Micro Finance Institutions (MFIs) and was aware of pockets of distressed institutions in that sector.
As part of measures to address challenges in this sector, the BoG would be working closely with the Ministry of Finance on a plan to resolve these problems in the sector with a view to restoring trust and confidence.
“Recent stress tests of the banking sector showed across board improvements in the system’s resilience, even though some residual risks remain due to high NPL ratios, relatively high level of concentration of exposures in a few banks, related party exposures, weaknesses in some specialised deposit-taking institutions, and the high level of interconnectedness, both among group structures and across the various sub-sectors in the financial sector,” the Governor added.
According to him, the on-going reforms by the Bank of Ghana including supervisory vigilance and strict enforcement of prudential regulations, are expected to address these residual risks, restore confidence in the financial sector, and should bolster the capacity of banks to lend to support the growing Ghanaian economy.
He also disclosed that Monetary Policy Committee had decided to maintain the policy rate at 17 per cent.
On Ghana’s completion of the IMF-supported ECF programme, he expressed the hope that steps would be taken to legislate a fiscal policy rule that would cap the deficit at 5.0 percent of GDP, together with the setting up of a Fiscal Council, to help bring certainty and, thereby, promote confidence in the economic outlook.

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