A former deputy Governor of the Bank of Ghana and the running mate of the NPP Dr. Mahamudu Bawumia has warned that eight banks in Ghana risks collapse due to the continuous hikes of bad loans on their books. “The asset quality review of banks, conducted in 2015, shows significant vulnerability of banks to current economic conditions and that if the affected banks were to fully provision for all the bad loans, a significant number of them will collapse.
Majority of BDCs likely to collapse over unpaid debts
In fact eight banks were identified to exhibit significant weaknesses with capital adequacy ratios of below 10 percent and some below 5 percent and nearing collapse so it is a real problem.”
Dr Bawumia stated at a lecture on the topic, ‘The State of the Ghanaian Economy – A Foundation of Concrete or Straw’.
The identity of the eight are not known but industry players have cautioned their collapse will destabilize the financial industry and in turn the economy.
The Bank of Ghana, in its first financial stability report for 2016 revealed that bad loans on the books of commercial banks in the country increased by 14.9 percent to 4.52 billion cedis in 2015 against the 2.72 billion cedis recorded in 2014.
The central Bank earlier admitted the growing spate of nonperforming loans on the books of banks is the key risk facing the banking sector.
Dr Bawumia believes the development is troubling.
– See more at: http://citifmonline.com/2016/09/11/8-banks-on-the-verge-of-collapse-bawumia/#sthash.V9bf6G4y.dpuf
