The Bank of Ghana (BoG) is urging banks to swiftly rebuild their capital buffers, particularly by receiving equity capital injections from shareholders.
This move aims to enhance resilience and further bolster the economy. The push for this capital rebuilding stems from the robust growth in bank profits, which comes after substantial losses incurred in 2022 due to the Domestic Debt Exchange Programme.
Dr. Ernest Addison, the Governor of the Bank of Ghana, made this announcement during the 40th Annual General Meeting of the Ghana Association of Banks (GAB). He assured that the early implementation of the Ghana Financial Stability Fund would offer additional support for recapitalization to eligible banks.
This support would align with the criteria and governance framework established in consultation with the International Monetary Fund and the World Bank.
Dr. Addison took the opportunity to reiterate the Central Bank’s commitment to closely monitoring developments in the banking sector, especially in light of the Domestic Debt Exchange Programme and other emerging risks. He emphasized that the Central Bank would take decisive actions as necessary to address any emerging issues.
Furthermore, the Bank of Ghana will ensure the safety of depositors’ funds and maintain stability and resilience in the financial system.
“The Bank appreciates the collaborative approach adopted by GAB and we encourage the association to continue to engage on issues with the aim of building a resilient banking system, within the confines of the law.”
The Governor emphasized the Bank of Ghana’s unwavering commitment to fostering a robust, secure, and sustainable banking sector that contributes to the nation’s growth objectives.
“While several policy measures have been implemented over the recent past, a lot remains to be done to promote a more resilient banking industry. Going forward, the Bank will continue to strengthen its regulatory and supervisory framework to promote confidence in the financial system”.
Furthermore, alongside the goal of maintaining the profitability levels achieved by banks during the initial eight months of 2023, the Governor emphasized that the Bank of Ghana will actively tackle particular risks associated with high-performing loans, deficient corporate governance, and ineffective risk management systems. This approach is intended to bolster robust risk management practices within banks, including addressing cybersecurity and information security-related risks.
Additionally, the regulatory authority will persist in implementing the Basel II/III capital standards, with the objective of fortifying the banking sector’s resilience.