The Central Bank of Ghana continues its effort to clean up the banking sector. Notably, among some obvious sanctions it has carried out has been the mandatory acquisition of two privately owned banks: Capital Bank and UT Bank backed by the state-owned Commercial Bank of Ghana, under the authorization of the Bank of Ghana in 2017. Other activities have been carried out by the Central Bank of Ghana, the sector still needs some stability. Currently, Ghana’s banking sector is unstable, although its prospects look good in the not too distant future if the central bank carries out significant regulations and activities.
The sector is still recovering from last year’s sanctions on the 2 banks, another bank has experienced direct sanctions from the central bank, therefore Unibank, (was chosen as the 6th best performing company in Ghana in the Ghana awards Club 100 in 2017). Currently, the Central Bank of the country has announced that, as of March 20, 2017, it has ordered and authorized the Administration of Unibank, (a privately owned bank) to be dissolved and assumed by KPMG. Curiously!
Now the Bank of Ghana itself needs some house cleaning. It is highly unacceptable to monitor a sector where a player is rated 6th best only to be said to have been withholding some important data. However, the Central Bank has its defense in the action against Unibank that the bank has persistently kept the capital adequacy level index close to zero, which could practically mean that Unibank is insolvent. Reports from the Central Bank indicated that it ordered Unibank to desist from granting additional new loans to clients, however, the Bank did not comply with the directive and continued to grant new loans. In addition, Unibank was ordered to desist from incurring additional capital expenditures that (Unibank) did not adhere to, violating section 105 of Law 930.
It is true that Unibank has been a creative bank if one is to observe its banking activities over the years from a distance, as such, the guidance of the central bank and KPMG should be one that does not dissolve its positive culture among employees and customers, that is easily seen to be “vibrating” between its clients and the bank. Unibank has some very loyal customers, and a large number of merchants. The Bank of Ghana should therefore guide Unibank, taking into account the brand that exists and finding the obvious ways to reactivate the bank.
That said, Universal’s number of banks is too much for Ghana. The number should be limited, as having about 40 banks for a population of 26 million is obviously a lot. What needs to be done is to develop the capacity of existing banks to “branch out” towards customers. This can be done in two ways: expanding the physical infrastructure to get closer to customers and expanding the digital infrastructure (online / mobile banking). Existing banks should be interested in improving their service experience, reaching out to people, expanding digital banking, and improving bank security.
To be clear, however, I am not in any way against the bank registry. In fact, my position is directly opposite, as I am no stranger to the importance of financial services for people and the economy as a whole. My position will go through the opposite. My opinion is clearly that instead of registering new banks that with some of them operate some branches without superior services or infrastructures, it would be better to endow existing banks with resources to improve their capacities.
Finally, some of these financial institutions will have to consider merging if there is any possibility of remaining profitable in business and serving clients with standards as the sector begins to become more competitive in the coming years and also especially now that the minimum capital requirement has been lowered. increased by the Central Bank to 400 million Ghana Cedis for banks, which will come into effect from December 2018.
