Moody's Investors Service indicated that Bank of Ghana (BoG) placed Unibank, the third largest bank in terms of assets in Ghana, under administration due to its negative capital and persistent liquidity challenges. It noted that BoG's action is credit positive for Ghanaian banks since it will enhance their long-term financial stability by removing weaker banks from the system. It said that BoG's intervention follows Unibank's failure to restore its capital adequacy ratio to the required 10% level, among several other regulatory breaches. In parallel, Moody's considered that the placement of Unibank under administration and the cancellation of licenses for smaller banks in 2017 reflect BoG's tightened regulatory stance, which will constrain the banks' ability to classify their NPLs and allocate their capital. It expected BoG's actions to lead to consolidation in the sector, which will result in fewer but larger banks. In turn, this would improve bank surveillance and induce other banks to mitigate excessive risk-taking, reduce unsustainable asset growth, or increase capital buffers. Further, Moody’s expected depositor confidence, particularly for smaller banks and other weaker franchises, to be negatively affected over the next quarter, with further transfers of deposits to larger and stronger franchises.
Source: Moody’s Investors Service
To optimize this website's functionality, we may utilize cookies, which are small data files stored on your device. This common practice helps improve your browsing experience.
Choose which cookies you wish to enable. You can change these settings at any time. However, this can result in some functions no longer being available. For more information on deleting cookies, please consult your browser help function. LEARN MORE ABOUT THE COOKIES WE USE.
Use the slider to enable or disable various types of cookies:
Save And Close