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How attractive are Ghana’s banks?
Following the recent collapse of five banks in Ghana, Bank of Ghana governor Ernest Addison is adamant about the state of the banking industry as he revealed that the total assets in the country's banking sector were up 15.7 per cent as at the end of June. Arnold Dublin-Green, Portfolio Manager at Ecobank joins CNBC Africa to discuss the state of Ghana's banking sector.
Mon, 06 Aug 2018 08:02:09 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Inadequate capitalization among Ghanaian banks necessitates significant capital raising efforts to meet regulatory requirements and enhance stability.
- Consolidation of five banks underscores governance and asset quality challenges plaguing smaller banks, prompting the need for stricter oversight and reforms.
- Distinction between larger well-governed banks and smaller banks facing governance issues is vital, advising foreign investors to focus on top-tier lenders for investment opportunities.
Ghana's banking sector has been experiencing a tumultuous period, marked by the recent collapse of five banks, raising concerns about asset quality and corporate governance within the industry. In a recent interview with CNBC Africa, Arnold Dublin-Green, Portfolio Manager at Ecobank, shed light on the state of Ghana's banking sector and the challenges it currently faces. Dublin-Green emphasized the need for increased capital requirements, as only a handful of banks had adequate capital to meet the proposed regulatory minimum in the financial year 2017. This shortfall indicates that significant capital raising efforts are necessary to bolster the sector's stability. The consolidation of five banks due to governance and asset quality issues underscores the urgent need for reforms and stricter regulatory oversight. Despite the shake-up, Dublin-Green commended the Bank of Ghana (BOG) for taking decisive actions to address the challenges and restore investor confidence. He highlighted the importance of differentiating between the larger, well-governed banks and the smaller banks grappling with governance and asset quality issues. Foreign investors eyeing the Ghanaian banking sector are advised to focus on the top-tier lenders with strong governance structures and sound asset quality. Dublin-Green noted that the improving economy is expected to support the growth of the banking sector, particularly for the larger banks that are well-positioned to benefit from the economic upturn. While the regulatory environment may become more stringent following the recent developments, Dublin-Green remains cautiously optimistic about the sector's growth prospects. The ongoing clean-up efforts and increased scrutiny are aimed at strengthening the banking sector and promoting long-term stability. As Ghana navigates through this period of transition, stakeholders are closely monitoring the regulatory landscape and the performance of banks to ensure a resilient and prosperous banking industry.
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