Most of the Banks that recorded post Domestic Debt Exchange (DDE) capital deficits have so far met or exceeded their recapitalisation requirements at the end of 2024, the International Monetary Fund (IMF) has revealed.
The IMF Country Report released recently indicated that despite shareholders capital injections, a few banks including one state-owned bank are behind on their recapitalisation schedule.
The IMF said it will continue to monitor banks’ progress toward implementing their post-debt exchange recapitalisation plans as approved by the Bank of Ghana.
According to the IMF, all banks pledged to reach a 13 percent Capital Adequacy Ratio (CAR), without regulatory forbearance, by end-2025 adding that such banks have met or exceeded the recapitalisation requirements for 2024 and are on course to restore the required CAR by end-2025.
“The BoG has intensified the monitoring of and remedial and/or corrective measures against five private and state-owned banks which have not complied with the recapitalisation requirements as of end-December 2024.
These banks have fallen behind on their recapitalisation schedule due to a mix of unmet capital commitments, increased Non Performing Loans, (NPLs) and incomplete booking of credit impairments identified under BoG’s 2023 asset quality assessments,” it said
“In addition, they are implementing updated recapitalisation plans accepted by BoG and addressing previous weaknesses and/or more recent performance slippages, towards meeting the end-2025 timeline for full compliance,” it added..
It said the Ministry of Finance has taken measures, including via the March 2025 budget, to ensure compliance by those state-owned banks that are behind scheduled recapitalisation while BOG continues to adopt measures proportional to the severity of any breach and to escalate action against any bank that is not substantively progressing towards full compliance with 13 percent CAR, without reliefs by end-2025.
“Banks with capital shortfalls are also restricted from excessive risk-taking and from making certain capital expenditures. BoG stands ready to deploy other components of its Prompt Corrective Action (PCA) framework if it becomes necessary to help promote safety and soundness of the sector,” parts of the report stated.
By Ebenezer K. Amponsah