Four banks, one of them state-owned, remain severely undercapitalized despite recent progress, the International Monetary Fund (IMF) has disclosed. This stems from unmet capital commitments, rising non-performing loans, and in some cases incomplete recognition of credit impairments flagged in the Bank of Ghana’s (BoG) 2023 asset quality review.
The IMF noted that one state-owned bank’s position has worsened recently. Still, its staff report highlights the government’s pledge to fully recapitalize its two state-owned banks using budget funds by the end of 2025.
After Parliament rejected the World Bank Ghana Financial Stability Fund (GFSF) A116, authorities are repurposing those funds with the World Bank’s help to tackle legacy issues in the special deposit-taking sector. For other banks, including the undercapitalized ones, the Bank of Ghana and Ministry of Finance emphasized that future public support will be restricted to those posing systemic risks and carefully structured.
The report also points out that GFSF capital injections into two of these banks have shifted state ownership to a majority stake. This is expected to revert to minority status once the banks finalize recapitalization deals with private investors.
Story by: Mercy Addai Turkson #ahotoronline.com