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There is no need to worry about bank losses because the worst is over, according to the Economist

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According to Godfred Bokpin, a professor at the University of Ghana Business School, there is no reason for excessive fear in the wake of the losses several banks in Ghana experienced in 2022.

He clarified that the institutions have made explicit the steps they have taken to stop the losses from happening again.

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According to Godfred Bokpin, a professor at the University of Ghana Business School, there is no reason for excessive fear in the wake of the losses several banks in Ghana experienced in 2022.

He clarified that the institutions have made explicit the steps they have taken to stop the losses from happening again.

By market value, the largest bank in Ghana, Standard Chartered Bank Ghana Ltd., posted a loss of 297.8 million cedis.

According to Bloomberg, while Ghana restructures the majority of its estimated 576 billion cedi public debt, banks in the second-largest economy in West Africa have suffered a loss of around $1.4 billion.

The release of full-year profits was given a one-month postponement by Ghana’s lenders.

Prof. Bokpin remarked, “People will be concerned to a large extent, but I want to believe that the worst moment is over,” on the Business Focus programme with Paa Kwasi Asare on TV3 on Monday, May 8.

Despite the fact that some of us have a minor issue with how Treasury Bills are treated in terms of payment as opposed to the medium term because the borrower is the same, the first quarter results for some of them show that they have very strong balance sheets from the group bank with the foreign banks, the speaker said. There is no reason to be concerned and there shouldn’t be a reason why there should be a run on those banks in the case of Stanbic and the other banks, as you will see from the group’s promise that they will recapitalize their institutions.

“However, when it comes to the domestic banks, if you take a close look at those that have been severely impacted, GCB and the rest of them, in fact, that is also on the strength of the government balance sheet, you will see that some of them have capital adequacy ratios that are very low despite the fact that the Bank of Ghana decided to remove the 3 percent capital conservation buffer in order to accommodate the effect of the DDEP.

“I think there will be a grace period they may adequately recapitalize, in collaboration with the central bank. To make sure that all of their banks are sufficiently capitalised, I’m confident that practically all banks will go through the capital planning process.

However, if you are focusing on the immediate effects, I believe the question is whether banks are strong enough to support growth and the creation of jobs. This is because some have explicitly stated that they will reduce their lending.

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