The Bank of Ghana (BoG) has urged  all local banks "that are not able to raise" the 400 million cedis capital requirement to "come together in the form of mergers".

The move, according to the Governor of the Bank of Ghana, Dr Ernest Addison, is to create space for the banks to consolidate their operations with the other entities after December 31st, 2018.

He said those struggling to meet the capital requirement had been directed to show their merger plans that will be implemented over a period.

“We have put on the table that the banks that are not able to raise that capital should come together in the form of mergers and we are ready to accept an indication of how you intend to put yourself together to meet that minimum capital requirement,” he told international TV network, CNBC.

“The idea is not to say that these banks should completely merge by the end of 31st December.  I know there are operational capital difficulties in doing that, integrating the IT system, staff, and all of those things. Those are operational issues that can be dealt with in the longer time frame."

The Association of Indigenous Universal Banks (AIUB) ealier last month appealed to President Nana Addo Dankwa Akufo-Addo to extend the December 2018 deadline for local banks to meet the minimum capital.

But Dr Addison has stressed that the central bank is not going to extend the deadline and has rather advised the banks to  show some commitment for a  merger.

“We just want the banks to come up with the indication that, this is what we are planning to do. These are the banks that are planning to come together and then the rest will be implemented over a longer period. So implementation is not necessarily for December 31st, but you need to make that conscious decision,” he said.

There are 34 universal banks in Ghana, 19 of which have foreign majority share ownership while 15 have local majority share ownership (6 of which were licensed within the last three years.)

Some major fallouts in the banking sector  have led to major takeovers.

UT and Capital Banks became largely insolvent, which made it difficult or impossible for them to meet their banking obligations.

Source:ghanaguardian.com