Standard Chartered Bank Ghana Limited says it will transfer GHȼ60 million from its retained earnings to its Stated Capital in compliance with the minimum capital requirement set by the Bank of Ghana.
The Banks and Specialised Deposits Taking Institutions Act 2016, (Act 930) requires all Banks to have a minimum paid up capital of GHȼ120 million.
There are however speculations that the BoG will raise the amount.
Speaking at in an interview following the Bank’s 2017 Annual General Meeting (AGM), where shareholders approved the directors’ recommendation to transfer the GHȼ60 million, Mr Kweku Nimfah-Essuman, Chief Financial Officer, said the bank was in a good position to meet whatever requirement the BoG issued.
Addressing whether the GHȼ60 million was adequate in boosting its stated capital in light of the speculations of an increase by the central bank, he noted that in taking such decisions, there was the need to ensure that there were no capital inefficiencies in the system.
He maintained the bank was well capitalised, explaining that aside the paid up capital, it had other sources of capital, including the statutory reserve and the income surplus.
“We are highly capitalised” he stressed.
He added that while the minimum requirement for bank’s capital adequacy ratio was 13 per cent, the bank’s capital adequacy stood at 32 per cent, above the minimum requirement. He said the bank was waiting for the BoG’s directive and take an appropriate decision on whether to transfer from its reserves or do a rights issues.
“We have always had this under consideration, and so we will not be taken by surprise if tomorrow, the Bank of Ghana says we should increase it because we already have the resources to it” stated Mr Ishmael Yamson, Chairman of the Board of Directors of Standard Chartered.
Ms Mansa Nettey, Chief Executive Officer (CEO) said the bank, in the year under review, focused on restructuring some its loan impairments, which rose in the preceding year due to tough economic environment.
It therefore pursued a strategy of loan restructuring and recovery in 2016, leading to a decline in its loam impairments from GHȼ213 million in 2015 to GHȼ81 million in 2016.
She said the bank worked closely with clients to understand their operating structure and also recovered a significant amount of the impaired loans.
The high rate Non-Performing Loans the banking sector was mostly due to its exposure to the energy sector, with the Volta River Authority and Bulk oil Distributing Companies (Companies), accounting for a major chunk of the NPLs. Government in the past year has arranged a restructuring and repayment of the banks’ exposure in the energy sector.
Ms Nettey said the bank, in 2015, took on huge impairment charge. “We took the hit earlier in 2014 and 2015 than a lot of the other banks” she said.
She confirmed concerns by some other banks that progress on government repayment of the BDCs loans had been slow but added government was in the process of issuing a $10 billion bond to settle the debts.
“I’m not sure where government is with this but I understand they are quite close to issuing this bond, but repayment has been slow,” she said.
Mr Xorse Godzi, Head of Global Banking, Corporate and Institutional Banking noted that the Volta River Authority loan repayment was however on course, with about three quarterly payments received and efforts being made by government to pay the rest including the BDC loans.
“We are cautiously optimistic as far the energy sector loans are concerned,” he stated.