The banking sector received about GH¢1.5 billion in fresh capital last year as banks moved to meet the Bank of Ghana’s December 31, 2018 deadline to meet the minimum capital requirement, a PwC survey has shown.
The BoG’s directive to the banks provided three sources of meeting the GH¢400 million minimum capital requirement. The banks could seek fresh capital, capitalized from their reserves or a combination of the two sources.
But the 2019 Pwc Banking Survey published last week revealed that banks injected fresh capital amounting to GH¢1.5 billion into their operations to meet the BoG directive.
“Sources of fresh capital injection included equity from parent companies as well as funds from other private investors. Some banks refrained from paying their shareholders dividend for the year to shore up their reserves to meet the GH¢400 million requirement,” the survey said.
36% of bank executives interviewed mentioned that they had secured the minimum capital through a hybrid of reserves and injection of fresh capital, while 18% secured it through fresh capital injection only.
The PwC survey sought the views of bank executives – Chief Executive Officers, Chief Finance Officers, Chief Risk Officers, Chief Operation Officers and Heads of Strategy in Ghana through interviews and questionnaires carefully designed to elicit views on the impact of the central bank’s reforms on their business.
According to some bank executives, the increase in stated minimum capital is necessary and crucial in unlocking opportunities for players in the sector. They believe that now, banks have a level playing field and are in a position to partake in bigger ticket transactions that hitherto were not possible or were the preserve of a few international banks. An example is government syndicated loans.
Further, the increased capital, coupled with an increase in the value of the single obligor limit on the back of increased net worth of banks following the injection of additional capital, puts banks on a good trajectory to explore lending opportunities to, especially corporate clients.