BOG published an update on the status of banking sector reforms in Ghana. Following the recapitalization exercise that ended on December 31, 2018, there are now twenty three universal banks operating in Ghana.
Ghana is undergoing strengthening of the regulatory and supervisory framework and the just-ended recapitalization exercise has re-positioned the banking sector as better capitalized, liquid, stronger, and more resilient. Sixteen banks (mentioned in the update) have met the new minimum paid-up capital requirement of GHC 400 million mainly retained income and fresh capital injection. Bank of Ghana approved a request for a voluntary winding up of the operations of Bank of Baroda (Ghana) Limited, effective from December 31, 2018. Bank of Baroda's winding up is the result of the Government of India's decision to rationalize the overseas operations of branches/subsidiaries of Indian public sector banks.
Pursuant to Section 123 of the Banks and Specialized-Deposit-Taking Institutions Act, 2016, BOG has revoked the banking licenses of Premium Bank Limited and Heritage Bank Limited. Premium bank had continuously breached the capital adequacy ratio (CAR) requirement since December 20178. Efforts to correct the capital inadequacy did not work and the bank reported a CAR of negative 125.26% with a capital deficit of GHC 528.33 million, implying that the bank is insolvent. Investigation revealed that the bank obtained its banking license through the use of suspicious and non-existent capital. Furthermore, the prudential returns submitted to the Bank of Ghana wee inaccurate. In addition, Heritage Bank Limited lost its license because its capital appears to have come from suspicious sources and it failed to meet the GHC 400 million capital required as of December 31, 2018, among other issues.
Keywords: Middle East and Africa, Ghana, Banking, Capital Adequacy, Recapitalization Exercise, Bank Licenses, Banking Reforms, BOG
Previous ArticleFSB Report Examines Financial Stability Implications of Fintech
The Prudential Regulation Authority (PRA) published the final policy statement PS21/21 on the leverage ratio framework in the UK. PS21/21, which sets out the final policy of both the Financial Policy Committee (FPC) and PRA
The Consumer Financial Protection Bureau (CFPB) proposed to amend Regulation B to implement changes to the Equal Credit Opportunity Act (ECOA) under Section 1071 of the Dodd-Frank Act.
The Prudential Regulation Authority (PRA) decided to maintain, at the 2019 levels, the buffer rates for the Other Systemically Important Institutions (O-SII) for another year, with no new rates to be set until December 2023.
The Financial Stability Board (FSB) published a progress report on implementation of its high-level recommendations for the regulation, supervision, and oversight of global stablecoin arrangements.
In a letter to the authorized deposit taking institutions, the Australian Prudential Regulation Authority (APRA) announced an increase in the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) are consulting on the preliminary guidance that clarifies that stablecoin arrangements should observe international standards for payment, clearing, and settlement systems.
The European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) have set out their respective work priorities for 2022.
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0, in addition to the reporting module on leverage under the common reporting (COREP) framework.
The European Commission (EC) published the Implementing Decision 2021/1753 on the equivalence of supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures, in accordance with the Capital Requirements Regulation or CRR (575/2013).
EC published the Implementing Regulation 2021/1751, which lays down implementing technical standards on uniform formats and templates for notification of determination of the impracticability of including contractual recognition of write-down and conversion powers.