Ecobank would welcom other banks

Story: Boahene Asamoah

THE Chief Executive Officer of Ecobank Transnational Incorporated (ETI), Mr Arnold Ekpe, has said the bank will welcome any local bank willing to partner it to build a major African bank.
Mr Ekpe was reacting to a question as to whether Ecobank Ghana would take over some local banks in response to the Bank of Ghana’s proposal to raise the minimum capital requirement for banks from the present GH¢7 million (¢70 billion) to between GH¢50 million and GH¢60 million (¢500 billion and ¢600 billion).
In an interview, Mr Ekpe stated that there were bound to be consolidations in the banking sector as a result of the central bank’s proposal, adding that “we will welcome any bank that wants to partner us.”
Mr Akpe said the decision by the Bank of Ghana “was in the right direction and good for the Ghanaian economy.”
He said the decision to raise the minimum capital requirement would position the banks to support the government’s economic development, and expressed Ecobank’s full support to the Bank of Ghana in that direction.
The Bank of Ghana (BoG) last week presented proposals to all banks for their re-capitalisation from the present level of GH¢7 million (¢70 billion) to between GH¢50 million to GH¢60 million (¢500 billion to ¢600 billion).
The proposal also seeks to increase the minimum capital requirements for deposit taking non bank financial institutions and finance houses from GH¢1 million (¢10 billion) and GH¢1.5 million (¢15 billion) to between GH¢5 (¢50 billion) and GH¢8 million (¢80 billion).
The BoG, therefore, called on banks and deposit taking non-bank financial institutions to submit capitalisation plans by the end of June 2008.
This means that banks and deposit taking non-bank financial institutions that cannot meet the requirement to merge or raise more funds through equity participation.
The Bank of Ghana said the existing capital base of most of the banks constrained them in taking advantage of new opportunities in the banking industry and were not strong enough to syndicate for major international contracts being undertaken in the country.
“Syndication has not proved to be successful in providing the needed capital cover for these new businesses, in part because each of the banks does not have adequate financial strength to support such syndication,” the proposal stated.
Mr Ekpe said it should be possible for local banks to take the lead in the vast majority of projects in the country such as the housing infrastructure, and many other projects.
He said the proposal by the central bank would help bring about bigger banks and build capacity of the banks in the country.
He stated that while it was important to raise the minimum capital requirement, there were risks that the central bank must guard against.
“There should be regulation against foreign investment that will seek to take over the whole banking system,” the CEO of the pan-African bank stated and expressed absolute trust in the central bank’s ability to regulate the industry.