GN Bank – Matters arising

GN Bank On August 14th, 2017 the Bank of Ghana (BoG) revoked the licenses of UT Bank and Capital Bank. GCB took over the two under a Purchase and Assumption transaction. Less than a month later on 11th September, 2017, the BoG announced an increase in the minimum capital requirement for banks from GHS 120 Million to GHS 400 Million (an increase of 233%) by December 31, 2018, giving Universal banks less than 18 months to source additional funds to beef up their capital. This was an unprecendented move. To indigenous banks, this was a clear case of raising the bar to high to ensure those targeted would be posted out of the banking system.

Sensing danger, some heads of indigenous banks then came together to form an “Association of Indigenous Universal Banks” to petition President Akufo-Addo to appeal to the Bank of Ghana and the Economic Management Team (EMT) for at least five years to pay up the new minimum capital requirement.. The President formed a 10 member committee to examine and act on the petition by the indigenous banks. (The committee consisted of 3 members from BoG, 3 members from banks, 3 members from Ministry of Finance and a chair from the presidency.) The committee was formed on 17th April 2018 and tasked to submit their final report by 26th May 2018.

The indigenous banks in their 11-page petition to the president, saw this new policy as out of the norm. They did not understand why the Bank of Ghana would give the same deadline to them as the foreign banks. They cited previous instances where when the minimum capital requirement was raised, indigenous banks were given an average of four years to pay. In 2003 for instance, when BoG raised the minimum capital requirement, banks were given almost four years to pay up, and in 2008 they were given almost five years to settle. At other times, the payment period was even flexible for existing banks, while new entrants were required to comply immediately.

These indigenous banks which included Prudential Bank, Royal Bank, Unibank, Beige Bank, OmniBank, GN Bank, Sovereign Bank, Heritage Bank, Premium Bank, and Construction Bank, proposed a payment schedule of annual instalments over a period of five years ending 2022 where they would each have finished paying the GHS400 million. The schedule they proposed included the following timelines:

That by December 2018, they will raise the minimum […]

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