The Bank of Ghana is confident that the recapitalisation requirements of commercial banks in the country of up to GHc 60 million will provide the much-needed boost to the economy.
Speaking on "The Role of the Banking Sector in Developing the Ghanaian Capital Market," at the Euromoney Conference in Accra, Central Bank Governor, Mr Kwesi Amissah-Arthur, said the near quadrupling of bank capitalisation from GH�445.8 million to about GH�1.65 billion in the three years between December 2008 and December 2011 may provide some economic stimulus.
Banks� reserves have also doubled from GH�666.9 million to GH�1.38 billion over the same period. �The increased capitalisation has enabled banks to take on large transactions vital to the economy,� he said, adding that the safety and soundness of the banking system hinged on adequate capital and good governance practices, including robust risk management systems.
The central bank is therefore taking steps to continually improve its regulatory and supervisory responsibilities to ensure that only strong and well-managed banks operate in the country, Governor Amissah-Arthur has said.
Ghana, he said, is already seeing signs of the significant inflows from foreign investors in the 3 and 5-year government bonds in which foreigners participate.
�These inflows have contributed to the increase in the level of the Bank�s gross reserves. However, the sovereign European debt crisis has presented some challenges in the early redemption of bonds. Because of our good record of economic performance and the greater policy flexibility we have been able to meet this challenge�.
According to him, the central bank was also encouraging banks to list in the local stock market because of the benefits to the wider economy.
�If the other twenty banks get listed on the Ghana Stock Exchange, the number of listed equities will increase to 56, thus add momentum to activities on the Exchange,� he said, adding that it was to tap those potential benefits that the Bank of Ghana was pushing for the listing of all banks on the stock market in the medium to long term.
To start with, he said, the central bank was offering the opportunity to domestically-controlled banks that had not as yet met the required minimum capitalisation of GH�60 million to explore the stock market option for closing their capital gaps.
He called for the need for attitudinal change for Ghanaian business owners of a desire to share ownership so as to properly harness the capital markets.
�Entrepreneurs must look beyond their immediate situation and seek to tap into capital from the wider public. This calls for a desire to share management and to be subject to serious scrutiny. This understanding is vital to unlocking the potential of our capital markets,� Mr Amissah-Arthur added.
He said the governance structures imposed by the stock market, including a broadening of ownership, regular, periodic reporting to the market and independent directors not only enhanced confidence in the institutions but complement the oversight role of the regulator.
�Banks that adopt this route have the opportunity to build enduring relationships with international banks and tap into medium to long term funds for intermediation in the local economy,� he said.
�Thus, in addition to opportunities for attracting additional capital resources and therefore building their capacities for risk taking, such banks stand to attract capital for greater intermediation,� Mr Amissah-Arthur added.
�At the central bank, we will continue to collaborate with the fiscal authority to consolidate the stability in the economy and create the conditions for capital market players- such as are represented by the audience- to play their role in harnessing the opportunities so created�.
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