In a research conducted by PricewaterhouseCoopers (PwC), 55% of banks’ executives have acknowledged the positive impact of the recent banking sector clean up. According to the executives, the banking sector clean up has impacted their banks positively. However 45% of the respondents say it has impacted them negatively.
The Bank of Ghana (BOG) in total revoked licenses of nine (9) banks in the clean up to restore stability and resilience of the financial system.
The positive respondents cite intensified competition, increased revenues and renewed confidence. They see increase in their customer base with a corresponding trend in transactions. The negative respondents however cite rather reduced deposits and present lack of confidence. They think the clean up hasn’t help much. Some also are of the view that systemic risks from the wider financial industry coupled with the revocation of bank licences have caused an increase in non performing rations (NPLs) as customers (especially SMEs and middle income to high net worth individuals) could not settle loans due to locked up funds. Available data, however does not support this assertion. According to the BoG, the NPL ratio has reduced from 23.2% of total loans in April 2018 to 18.9% in April 2019 – the level falls to 9.0% when loan loss provisions are taken into account.
According to PwC’s report, some respondents did not give any feedback since they do not see any impact of the banking sector clean up on their business. The 55%-45% split makes it a somewhat balanced view of whether the banking sector clean up has had a positive or negative impact.
Ghana Talks Business (GTB) is of the view that, the full effects of this clean up could be fully assessed after five years. GTB speaking to over fifty people gathers that confidence in the banking sector is still quite wobbly. The somewhat confidence in foreign banks is as a result of people requiring banking services. Hence the populace have to bank with them because they need to receive their salaries, make payments and perform other transactions.
Savings and investments are however being done very cautiously. Savers are asking more questions with more skepticism. Confidence is also expected to redound based on how regulations go. The public want to see BOG ensure compliance to the many initiatives introduced since the clean up. That was the cause in the first place. Mr Kwame Pianim, a veteran economist, has stated that it would take up to decade before confidence is restored.