15 out of 21 banks in Ghana recorded losses due to the DDEP

The International Monetary Fund (IMF) has noted that some banks, including one state-owned bank, are still struggling to meet their recapitalisation requirements.

According to the Fund, most of the 13 banks that recorded capital deficits following the Domestic Debt Exchange (DDE) have now met or exceeded their recapitalisation requirements as of the end of 2024.

The IMF’s Country Report on Ghana attributes this improvement to strong profitability and support from the Ghana Financial Stability Fund (GFSF), adding that these banks are on track to restore the Capital Adequacy Ratio (CAR) of 13% without relief by the end of 2025.

The IMF stated that the government is working to support the struggling banks as part of efforts to strengthen the country’s financial stability.

It noted that financial sector stability has been maintained following the DDE; however, banking sector recapitalisation has progressed more slowly than expected.

“The authorities have taken intensified actions to address undercapitalised banks. Looking ahead, further strengthening financial sector stability requires fully implementing the plan to strengthen NIB, finalising the reform strategy to support state-owned banks’ viability and sustainability, and developing contingency plans to address weak banks that fail to recapitalise," the report stated.

The Fund added that, "However, despite shareholder and/or GFSF capital injections, a few banks (including one state-owned) are materially behind on their recapitalisation schedule due to slow progress against shareholder capital commitments, higher NPLs, and/or delayed booking of credit impairments and required provisioning identified under the BoG’s 2023 asset quality assessments."

According to the report, these banks are under intensified monitoring by the Bank of Ghana (BoG) and are subject to corrective measures aimed at accelerating their recapitalisation plans to achieve a CAR of 13% by the end of March 2025.

"Parliamentary approval and implementation of the World Bank-funded segment of the GFSF could help some banks achieve CAR targets by end-2025, provided that they secure capital injections sufficient to reach capital levels eligible for access," the Fund projected.

The IMF further emphasised that, "Stepped-up efforts to improve the crisis management and resolution framework, enhance financial-sector safety nets, and address legacy issues at the specialised deposit-taking institutions are also important.”

Earlier reports indicated that 15 out of 21 banks had recorded losses as a result of the Domestic Debt Exchange Programme.

SSD/MA

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