‘Don’t Kill Local Banks’

The Association of Indigenous Universal Banks (AIUB) has appealed to President Nana Addo Dankwa Akufo-Addo to extend the December 2018 deadline for local banks to meet the minimum capital requirement so as to help meet the needs of players in the informal sector.
The President set up a committee following a petition presented by the association.
But the association expressed concern about the tone and language of the Central Bank recently in the media.
“This is because the remarks by the regulator gives an impression that it does not care about the sustenance of local banks, and is only interested in offloading them despite the huge cost to the economy, it 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.)
“The establishment of relatively small and purely local universal banks has enabled credit to reach the informal sector, particularly indigenous micro and small enterprises, cottage industries, agric-businesses, small-scale manufacturers, petty traders and crop, as well as livestock farmers, which the bigger banks had and continue to marginalize because of the perceived high risk of the sector.”
The association said out of the 19 foreign majority owned banks, seven are Nigerian banks.
Out of the 15 local banks, 10 are 100 percent Ghanaian owned.
“It is important to state that this is the sector, which requires consistent nurturing and support to grow to become the big businesses of tomorrow that can employ our growing unemployed youth and also create wealth for our nation.”
The association revealed that if government does not treat local banks well, and allow them to shore up their capital gradually, over 30 percent of their workforce could potentially lose their jobs, with damning consequences for their dependents.
It said the informal sector would find it difficult to thrive since foreign banks have shown insensitivity over the years to the plight of players in the sector.
“The new increase from the 2013 level of GH¢120 million to GH¢400 million announced by the Bank of Ghana (BoG) in September 2017 represents an increase of 233 percent, which is clearly too steep. Furthermore, the situation is aggravated by the short period of 1 year three months given to banks to comply with this requirement.”
“Nevertheless, the quantum of the increase should not overburden the indigenous banks and the timeframe for the attainment should always be accommodating.”
“Your Excellency, unfortunately, indigenous universal banks will not be in a position to raise the addition capital within such a short period without being taken over by foreign investors, who are already on the market seeking take-over opportunities.”
Should the President fail to assist the local banks, staff of over 10 banks could be adversely affected.
“The exercise should look at protecting local banks like Nigeria did instead of the current situation which is seeking to give more protection to foreign ones under the guise of building capacity for big ticket transactions.”
Source: Daily Guide
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