The Bank of Ghana has given banks up to the end of September 2023 to provide their recapitalization plans.
This follows the impact of the Domestic Debt Exchange Programme Domestic Debt Exchange and the challenging operating environment that has eroded the minimum capital of some banks.
According to the Governor of the Bank of Ghana, Dr. Ernest Addison, the regulator will ensure all banks comply.
He pointed out that the banks minimum capital requirement will be increased from the current ¢400 million.
Responding to a question at the Monetary Policy Committee of the Bank of Ghana press briefing, the Governor of the Bank of Ghana, Dr. Ernest Addison, said “The impact of the exchange has been to reduce the capital buffers of banks. So if you look at the analysis that was done when we take cognizance of the three percent additional buffer the banks will need to add up to their capital”.
Due to the DDEP, the Central Bank was forced to reduce the Capital Adequacy Ratio of the banks to 10%, from 13%.
The Governor said “right now we have reduced the capital adequacy ratio to 10% and we are hoping that over the next three years, the banks will be able to rebuild their capital buffers and hopefully, at that time we may bring in the additional 3% capital buffers”.
“So yes, most banks are working towards that. They have been given a period, up to September [2023] to submit to us what their recapitalization plans are”.
DDEP: Banks have up to 2025 to restore minimum paid-up capital
It will be recalled that Joy Business reported earlier on that Banks have a maximum of four years, ending 2025, to restore the minimum paid-up capital.
This is as a result of capital shortfall arising solely from the derecognition losses.
According to the Bank of Ghana, derecognition losses emanating from the Domestic Debt Exchange Programme will be spread equally over a period of four years, effective 2022, for the purposes of Capital Adequacy Ratio (CAR) computation.
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