Bank of Ghana monitoring Nigerian banking crisis

The Bank of Ghana (BoG) says it is closely monitoring activities in the Nigerian banking sector to ensure that the crisis there does not spread to Ghana.

The Governor of the bank, Mr Kwesi Bekoe Amissah-Arthur, said Ghana was having enormous support from the Nigerian authorities for ensuring that the various Nigerian banks with interest in the country operated within the local regulatory framework and not having any contagion effects on the local banking industry.

Mr Amissah-Arthur, who gave the assurance when he paid a courtesy call on the Managing Director of the Graphic Communications Group Limited (GCCL), Mr Ibrahim Awal, said the increased surveillance on the banks emanated from the crisis in the Nigerian banking sector last year, and noted that “‘we are all out to ensure that savings of Ghanaians and other investors are secure”.

The Nigerian Central Bank had to inject 620 billion naira ($4.2 billion) to keep the country’s banks afloat and avert a total collapse of the banking industry.

It is an achingly familiar vocabulary for the global recession – bailout, credit crunch, stimulus – except that Nigeria’s banking crisis has little to do with credit default swaps or subprime mortgages.

Mr Amissah-Arthur said the likelihood of a spillover because of the connections was possible, but noted that the Ghana central bank was on top of the issue and that “the co-operation by the Nigerian counterpart was positive”.

“The Governor of the Central Bank of Nigeria is keen on ensuring that what happened in Nigeria does not happen in Ghana, a move that is intended to avoid any embarrassment,” he said.

He said while the BoG had not shut its doors to the licensing of new banks, it would be guided by the need to ensure a balance in attracting banks from North America, the only region in the world that had no representation in the Ghanaian banking sector.

So far, the country has the complement of banks from West Africa, North and Southern Africa, Asia and Europe, but has none coming from the North Americas, a balance the central bank wants to achieve.

Ghana amended its banking laws two years ago to allow for offshore banking operations in the country. Two years after implementing the concept of International Financial Services Centre (IFSC), the Organisation for Economic Co-operation and Development (OECD) came out to say Ghana stood the chance of inviting ‘bad’ money being laundered into the system.

In response to this worry, the governor said the central bank was also reviewing the operations of Barclays Bank, the only bank that currently operates the offshore banking concept, in order to ensure that it stayed within the ambit of the law, and that their operations would guide the bank on its general attitude towards offshore banking.

The BoG was also working at resolving the inability of banks to issue coins to clients and their (the coins) general low usage in the country, with possible solutions, including the use of coins vending machines.

Source: Daily Graphic