BoG to Divest ADB Bank Shares to Government; Resolve Structural Challenges in State-Owned Banks by April 2025
The Bank of Ghana (BoG) has pledged to divest its stake in ADB Bank, transferring ownership to the government as part of a broader strategy to mitigate structural challenges within state-owned banks.
This commitment, outlined in the International Monetary Fund’s (IMF) second review of the Economic Credit Facility programme, underscores the central bank’s intent to reduce the need for future government recapitalisations.
The BoG has set an ambitious target to conduct a thorough diagnostic of the structural issues plaguing state-owned banks by the end of April 2025.
This review will encompass an analysis of business models, governance, risk management, and the legal frameworks governing these institutions.
Based on the findings, the central bank plans to formulate a comprehensive strategy to address these enduring challenges.
In the interim, the BoG has indicated that the stringent measures recently adopted to address the difficulties at the National Investment Bank (NIB) will serve as a blueprint for interventions at ADB Bank.
These measures include linking recapitalisation efforts to governance reforms, business model rationalisation, and enhanced risk management practices.
“In the meantime, strong measures adopted to address NIB’s challenges will also serve as a guide to help ADB, by linking recapitalization to inspection, governance reform, business model rationalization, and better risk management. The BoG aims to offload its share ownership in ADB to the government,” the bank stated.
Concurrently, the BoG has announced its intention to phase out the regulatory forbearance introduced in response to the domestic debt exchange (DDE).
The process of lifting forbearance on the recognition of DDE-related losses in Capital Adequacy Ratio (CAR) computations will be staggered, with one-third removed annually from January 2023 until the end of 2025.
A schedule for withdrawing other temporary forbearance measures, including those that relaxed minimum CAR requirements, will also be enforced.
The central bank says it remains vigilant, closely monitoring the potential unintended consequences of these forbearance measures, and is prepared to make necessary adjustments to mitigate any adverse effects.
