THE Managing Director of Heritage Bank, Mr Patrick Fiscian, is convinced that banks have the needed capacity to deplore the cumulative GH¢14 billion that will be mobilised from the next round of recapitalisation due to end in December this year.
His confidence is anchored on the strong robust risk systems, technical expertise and product lines of the various banks, giving them the right pedestal to launch on into serious banking once the funds are successfully mobilised.
As a result, he dismissed fears of a capital glut in the banking sector after December 2018, when all the 35 banks are expected to have successfully recapitalised to the regulatory requirement of GH¢400 million.
“The GH¢400 million capitalisation that you are talking about is less than US$100 million and really, what can you do with that?
“Even currently, the capitalisation of most banks is less than US$30 million. You cannot do serious banking with just US$30 million and so I do not think that the kind of monies we are talking about is going to necessarily create a glut in terms of funds available for investment,” he told the GRAPHIC BUSINESS on January 11.
Appetite for funds
Mr Fiscian was speaking on a range of issues to mark the bank’s first anniversary.
Heritage Bank, an indigenous lender, launched its operations in February last year, with a pledge to deliver world-class banking services that focuses more on small and medium enterprises.
Its stated capital is currently around GH¢130 million, with plans afoot to mobilise the remaining GH¢270 million from a combination of fresh capital injection by existing shareholders and another from prospective institutional investors.
Just like Heritage Bank, other banks have also given an assurance of their readiness to mobilise the needed amounts before the Bank of Ghana’s dateline.
Although good news, it begs the question if the economy and businesses have the appetite to absorb those funds.
In his estimation, Mr Fiscian said enormous opportunities existed in the economy to be able to absorb the funds to be raised.
“The total capitalisation of the banking industry vis-à-vis the total GDP is just around 2.2 per cent. Some years ago, it used to be 2.7 per cent. Now, if we (banks) exist to support businesses and your ability to support to the economy is just 2.2 per cent, then you will agree with me that there is a lot of room for us to do business,” he added.
With 35 banks currently in operation, a successful recapitalisation should raise the industry’s paid-up capital to GH¢14 billion.
This is more than double of the current paid-up capital of the total industry, which was reported at GH¢4.45 billion in October last year.
With business confidence picking up and total economic output, measured by gross domestic product (GDP), on the rise, Mr Fiscian said the banks would need to mobilise the right amounts of capital to be able to meet the growing appetite of the industry or miss out on the party.
2018 in perspective
Turning his attention to economic prospects for the bank this year, the Heritage Bank MD said: “I see a lot of positives although things appeared to have slowed down a bit last year because of some uncertainties.”
“However, I think we have a clearer picture on the lay of the land in terms of which businesses are thriving and which are struggling. Once we have some bit of stability, it facilitates planning,” he said.
As a new bank, Mr Fiscian said his outfit spent last year putting systems in place for take-off.
And with signals of stability from the monetary and fiscal side, he said: “We are quite happy that we will be able to achieve our business plan for the year.”