On September 11, 2017 The Bank of Ghana (BoG) increased the minimum capital requirement for commercial Banks to ¢400 million (74 mil. EUR) from ¢120 million (22 mil. EUR). The increase was 233 percent over the old capital level was the biggest capital increase witnessed over the banking landscape. The commercial banks were given up to one year to recapitalize. The one year is expected to expire on December 31, 2018. If any bank is unable to meet the capital level, it will either lose its license and drop to a Savings and Loans category or may opt to completely fold up its business.

The BoG revealed during their press statement that the move was a financial sector reform plan to further develop, strengthen,   and   modernize   the   financial   sector   to   support   the government’s economic vision and transformational agenda.

During the same period, the BoG also announced the revocation of the licenses of two insolvent banks, UT Bank and Capital Bank. According to the statement from the BoG, ’UT Bank and Capital Bank were deeply insolvent, meaning that their liabilities exceeded their  assets,  putting  them  in  a  position  not  to  be  able  to meet their obligations  as  and  when they  fell  due’. BoG subsequently approved a Purchase and Assumption agreement, allowing GCB Bank to take over all deposit liabilities and selected assets of both UT Bank and Capital Bank.

On August 1, 2018, the BoG again revoked the universal banking licenses of five banks (UniBank Ghana Ltd., Royal Bank Ltd., Beige Bank Ltd.,Sovereign Bank Ltd. and Construction Bank Ltd.), and issued a license to a newly created entity – Consolidated Bank Ghana Limited, to be wholly owned by the government of Ghana. Note that all these banks are indigenous banks, meaning they are all privately owned domestic banks. It is also noteworthy to state that almost all foreign banks in the country have either met the capital requirement already or are on course to meet it before the deadline.

Three months to the deadline for the recapitalization, commercial banks in the country have been racing against time to recapitalize. There is likely to be mergers of some of these banks before the year-ends. Omnibank and Sahel Sahara banks are the two known banks undergoing processes to merge to meet the capital level. The situation has led to several job losses in the banking sector and panic withdrawals by deposits.

Although such situation may aggravate the situation of importers interested in importing Czech products or services, it should not have an impact on the realization of larger projects, where financing by Czech banks is also envisaged.

Dominic Amoah, commercial assistant, Embassy of the Czech Republic in Ghana