Ghana Sets January Deadline for Banks to Comply With Basel II

7/2/2018 11:45:38 AM

Another directive to further strengthen the banking sector. 

The Bank of Ghana is changing the way lenders calculate their capital-adequacy levels as the regulator seeks to strengthen the industry.

Banks would on Sunday begin adopting Basel II framework, which will require they include their risk-weighted assets when determining capital adequacy ratios, the Accra-based regulator said in a statement on its website on Monday. The companies have until Jan. 1 to comply with the directive, it said.

Ghana is looking for ways to bolster its banking industry as souring loans threaten the survival of some lenders. The regulator last September more than tripled the minimum paid-up capital requirement to 400 million cedis ($83 million), giving companies until the end of the year to raise cash. Non-performing loans as a percentage of total credit increased to 23.4 percent in April from 19.8 percent a year earlier, according to central bank data.

The risk-based capital adequacy ratio requires “banks to hold appropriate capital commensurate for unexpected losses that may arise from business through capital transactions, credit, operational and market risks,” the central bank said.

Source: Bloomberg 

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