Following a petition to the president by local banks to extend the duration required for banks to meet the new minimum capital requirement, the Council of State has waded into the matter and is rather urging local banks to consider mergers if they cannot raise the stated capital by the December deadline.
The Council has therefore endorsed the actions of the BoG to ensure prudence in the banking landscape, and this is evident by a statement captured in a release after they met the Governor, signed by the acting Secretary to the Council, Peace Okantey: “Ultimately, depositors’ interest must be protected at all times and the public needs to be assured to boost confidence in the banking sector”. This shows that the Council believes struggling indigenous banks need to consider mergers to enable them compete favourably.
Meanwhile, a 10-member committee has been constituted by President Akufo-Addo to look into the grievances of local banks, and its final report should be completed by May 26 this year. Thus, the position of the Council of State is also its stance – but it could well be that after the committee presents its report and recommends otherwise, the president could well accede to the demand.
However, gathering from experts, it is believed that extending the date might well not find favour with many since ample time was given for banks to consider their means of meeting the new minimum capital. As expressed by both the BoG and Council of State, the major concern is protection of depositors’ funds.
The situation wherein government has to compensate depositors for lost funds due to problems of liquidation is not sustainable, and there needs to be action taken to insulate depositors from bad decisions taken by managers of financial institutions in distress.
Besides, the Governor of the BoG has already indicated that five indigenous banks have met the new minimum capital requirement even before the deadline; so, it serves as an incentive to maintain the course.
However, this is subject to the committee’s report – which outcome we will all be made aware of by the end of next month.