The Central Bank of Ghana continues in its effort to sanitize the banking sector. In particular, among some obvious sanctions it has carried out has been the mandatory acquisition of two privately owned banks: Capital Bank and UT Bank by the state-owned Ghana Commercial Bank under the authorization of the Bank of Ghana in 2017. Other activities have carried out by the Central Bank of Ghana, the sector still needs some stability. Ghana’s banking sector is currently unstable, although its outlook looks good in the not too distant future if the central bank carries out important regulations and activities.

The sector is still reeling from last year’s sanctions on the 2 banks, yet another bank has experienced the direct sanctions from the central bank, hence Unibank, (was awarded the 6th best performing company in Ghana at the awards Ghana Club 100 in 2017). Currently, the Central Bank of the country has announced that as of March 20, 2017, it ordered and authorized the dissolution of the Management of Unibank (privately owned bank) and its acquisition by KPMG. Curiously!

Now, the Bank of Ghana itself needs some housekeeping. It is highly unacceptable to oversee a sector where a player is ranked 6th best just to say that he has been hiding some important data. The Central Bank, however, has its defense for the action against Unibank in the sense that the bank has persistently maintained a capital adequacy ratio close to zero, which nicely could practically mean that Unibank is insolvent. Reports from the Central Bank indicated that it ordered Unibank to stop granting new additional loans to clients, however, the Bank failed to comply with the directive and continued to grant new loans. In addition, Unibank was ordered to desist from incurring additional capital expenditures to which they (Unibank) did not adhere, in violation of Article 105 of Law 930.

It is true that Unibank has been a creative bank if one is to look at its banking activities over the years from a distance, as such the guidance from the Central Bank and KPMG to the bank must be one that does not dissolve its positive employee culture. -customer who is easily seen “vibrating” between their customers and the bank. Unibank has some very loyal customers, and a large number are merchants. Bank of Ghana therefore needs to guide Unibank, keeping in mind the brand that is there and finding the obvious ways to revive the bank.

Having said this, the number of universal banks is too much for Ghana. The number should be limited as having about 40 banks for a population of 26 million is obviously a lot. What needs to be done is to build the capacity of existing banks to “branch” customers. This can be done in two ways: expanding the physical infrastructure to get closer to customers and expanding the digital infrastructure (online/mobile banking). Existing banks should be interested in improving their service experience, getting closer to people, expanding digital banking media, and improving banking security.

However, to be clear, I am in no way against bank registration. In fact, my position is directly opposite, since I do not forget the importance of financial services for people and the economy as a whole. My position will go the other way. My point of view is clearly that instead of registering new banks that with some of them operate some branches without superior services or infrastructure, it would be better to provide existing banks with resources to improve their capabilities.

Ultimately, some of these financial institutions will have to consider merging if there is any chance of remaining profitable in business and serving customers to standards as the industry begins to become more competitive in the coming years and also especially now that the minimum capital requirement has been increased by the Central Bank to 400 million Ghana Cedis for banks, which will come into effect from December 2018.