Bank of Ghana begun 2years ago the clean up of the banking sector as one of the conditionalities/recommendations from the IMF under the ECF program reviews.
Just before the IMF ECF program with Ghana comes to an end in April 2019, BoG has successfully cleaned the banking sector through its recapitalisation program, which has seen the total number of banks reduced from 36 universal banks to 23 banks as announced by the Governor of the Central Bank on Friday 4th January 2019.
Government in December 2018 got parliament to approve the Fiscal Responsibility Bill which seeks to set limits on Government spending and to ensure fiscal responsibility, macroeconomic stability and debt sustainability.
Government also in the same month gave approval for the creation of two financial councils: the Fiscal Responsibility Advisory council and the Fiscal Stability council, to provide independent advice to Government and to strengthen the financial secto
These developments have sent very strong signals to the international community on Government resolve of managing the economic affairs of this country with the mindset "Our own destiny in our hands and we are more than capable of achieving great success".
These developments will go a long way to make IMF happy in exiting this program, with positive results, as echoed by Christine Lagarde during her visit to Ghana in December 2018.
Following Bank of Ghana announcement on January 4th on the list of recapitalised banks and Ministry of Finance press release on 5th January on Ghana Amalgamated Trust (GAT) supporting some 5 local banks through bond funding from some selected pension funds and investors, which will in turn be used as equity investment in the 5 local banks with significant controlling powers to GAT, Government and BOG must be commended for thinking outside of the box to save our solvent local banks, though some questions may arise as to the appropriateness of the bond funding by GAT in view of Act 930 position on borrowed funds in a bank's capital mix, which clearly does not allow for borrowed funds, by and large Government has saved the face of our local banks and should be commended.
Now as it stands, the ratio of local banks to foreign banks is 61:39 as out of 23 banks, 9 are local banks.
The list of the standing local banks are as follows:
Consolidated Bank Ghana
Under the clean up exercise, a total of 10 Local banks' licenses were revoked, namely:
Some two (2) other local banks merged with other banks respectively, namely Omnibank and GHL Bank.
Overall, banking confidence has gone up and Ghana can now boast of a strong banking sector with adequate capitalisation and where customers' deposits are firmly secured.
Banks in Ghana are now in a very good position to target listing their shares on the stock exchange for the ordinary investing Ghanaians to participate in the upcoming banking sector growth and in the share of profitability from the overall expected economic growth.