As various sectors of the economy continue to reel over the impact of the Covid-19 pandemic, concerns have been raised about how bad things could get for the banking sector.
Prior to Covid-19, there was a financial sector reform by the Bank of Ghana (BoG), which resulted in the folding up of large number of financial institutions in the country.
With Covid-19 in sight, it appears the financial sector has been dealt with a double blow.
However, a Senior Country Partner of the PricewaterhouseCoopers (PwC), Mr Vish Ashiagbor, says in spite of the devastating impact of the virus outbreak on businesses the financial institutions are in a much better position to surmount the challenges posed by the pandemic.
Speaking on TV3’s ‘Business Focus’ programme on Monday, May 18, 2020, which was monitored by the Ghana Talks Business, Mr Ashiagbor explained that the recapitalization of the financial institutions coupled with the new regulations introduced by the BoG have strengthened the sector to respond to any shocks.
“So I think that much as this is a significant threat to the sector, the banks are in a much, muchstronger position to deal with this than they would have been say two to three years ago”, he said.
Banking sector cleanup
In January, 2017, the BoG took the bold initiative to reform its ailing banking sector.
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Consequently, it announced a recapitalisation programme with a requirements of GH¢230 million for banks, but the figure was further increased to GH¢400 million.
This resulted in the revocation of the license of some local banks. The banks have since gone under receivership.
The entire process ended in 2019.
PwC report
The PwC report highlighted the potential risk that Covid-19 pandemic posed to financial sector.
It painted a grim outlook for the industry relative to operations and profitability despite the measures put in place by the Bank of Ghana to cushion impacts of the virus on the financial sector.
While explaining further on some details of the report, Mr Ashiagbor said the intent of the report was not to scare the banking sector but to point out to them that the worst possible impact of the pandemic was yet to come and encourage them to put in place mitigating measures to contain those risk.
“We are not suggesting by any means that the banks are in trouble, however there are risk that they have to address and that is what we are trying to draw attention to”, he said.
By Salifu B.B. Moro
