• Login
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
  • Home
  • News
    • General
    • Political
  • Economy
  • Business
    • Agribusiness
    • Aviation
    • Banking & Finance
    • Energy
    • Insurance
    • Manufacturing
    • Markets
    • Maritime
    • Real Estate
    • Tourism
    • Transport
  • Technology
    • Telecom
    • Cyber-security
    • Cryptocurrency
    • Tech-guide
    • Social Media
  • Features
    • Interviews
    • Opinions
  • Reports
    • Banking/Finance
    • Insurance
    • Budgets
    • GDP
    • Inflation
    • Central Bank
    • Sec/Gse
  • Lifestyle
    • Sports
    • Entertainment
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video
No Result
View All Result
No Result
View All Result
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
No Result
View All Result
Home Business Banking & Finance

Debt exchange could lead to material capital shortfalls in Ghana’s banking sector

3 years ago
in Banking & Finance, Business, Economy, Features, highlights, Home, home-news, latest News
1 min read
0 0
0
84
VIEWS
Share on FacebookShare on TwitterShare on Linkedin

Debt exchange could lead to material capital shortfalls in Ghana’s banking sector

Ghana’s banking sector is bracing for a significant impact as a result of the Domestic Debt Exchange Programme (DDEP) that has just concluded. According to a statement from ratings agency Fitch, banks holding large amounts of local currency government bonds will experience a material weakening of their capitalisation, with a potential net present value loss of almost 50% likely to occur.

The restructuring of the government bonds was initiated by the Ministry of Finance and was designed to address concerns around the country’s high debt burden. Despite the voluntary nature of the DDEP, which allows creditors to swap eligible government bonds for new ones with lower coupons and longer tenors, Ghanaian banks have been highly incentivised to participate. This is due to the old bonds’ risk-weighting being increased from 0% to 100%, and non-participating banks being ineligible for liquidity support from the newly created Ghana Financial Stability Fund.

The debt exchange has been subject to multiple delays and modifications since its launch in December 2022. Creditors representing approximately 85% of eligible bonds eventually took part in the programme. However, the remaining 15% of the banking system’s securities, represented by treasury bills, were excluded from the exchange.

Fitch’s estimate of a net present value loss of almost 50% is based on the coupon rates and tenors of the new bonds and a discount rate of 20%. The agency has also warned that the restructuring could lead to material capital shortfalls at some banks, which could have knock-on effects for the wider banking sector.

This is not the first time Ghana’s banking sector has faced challenges in recent years. In 2017, the Bank of Ghana embarked on a clean-up exercise that saw nine banks being declared insolvent and subsequently collapsed. The move was part of a wider effort to address concerns around non-performing loans and capital adequacy ratios.

While the DDEP is a voluntary programme, the impact on the banking sector could be significant. The risk-weighting of the old bonds being increased to 100% means that banks may need to hold more capital against their holdings, which could affect their lending ability. The exclusion of treasury bills from the exchange also means that banks holding these securities may be less incentivised to participate, potentially leading to further imbalances in the sector.

RelatedPosts

IMF Announces Appointment of Dan Katz as First Deputy Managing Director

Kenyan Man Indicted in U.S. Over $650m USAID-Funded Health Supplies Scandal

Botswana Offers U.S. Duty-Free Access to its Diamonds in Exchange For 0% Tariff

The DDEP has closed, and Ghana’s banking sector will be closely monitoring the impact of the restructuring. With concerns around debt levels and capital adequacy ratios, it is essential that banks maintain sufficient capital levels and adapt to any changes resulting from the programme. While the government’s efforts to address these issues are commendable, the success of the programme will depend on its ability to balance the needs of the banking sector with those of the wider economy.

Tags: banking sectorBanksdebt exchangeDebt exchange could lead to material capital shortfalls in Ghana's banking sector
No Result
View All Result

Highlights

Dalex Finance CEO Warns Against Profit Without Principles at CEO’s Breakfast and Networking Meeting

Conscious Leadership Must Drive Africa’s Growth, Says Rev. Sagoe

AfCFTA Secretariat Urges Acceleration of Digital Trade and Regional Value Chains 

Outcomes & Impacts: The Effective Way of Determining Real Value of PR Campaigns for Organisations, Stakeholders and Society

Mali Army Holds Back 70 Allied Gold Trucks as Militants Block Fuel Imports

Anglo American Takes Peabody to Arbitration Over Failed $3.8bn Deal

Trending

Business

IMF Announces Appointment of Dan Katz as First Deputy Managing Director

October 4, 2025

IMF Announces Appointment of Dan Katz as First Deputy Managing Director The IMF Executive Board today approved...

Kenyan Man Indicted in U.S. Over $650m USAID-Funded Health Supplies Scandal

October 4, 2025

Botswana Offers U.S. Duty-Free Access to its Diamonds in Exchange For 0% Tariff

October 4, 2025

Dalex Finance CEO Warns Against Profit Without Principles at CEO’s Breakfast and Networking Meeting

October 4, 2025

Conscious Leadership Must Drive Africa’s Growth, Says Rev. Sagoe

October 4, 2025

Who we are?

NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World

NorvanReports is a unique data, business, and financial portal aimed at providing accurate, impartial reporting of business news on Ghana, Africa, and around the world from a truly independent reporting and analysis point of view.

© 2020 Norvanreports – credible news platform.
L: Hse #4 3rd Okle Link, Baatsonaa – Accra-Ghana T:+233-(0)26 451 1013 E: news@norvanreports.com info@norvanreports.com
All rights reserved we display professionalism at all stages of publications

No Result
View All Result
  • Home
  • Business
    • Agribusiness
    • Aviation
    • Energy
    • Insurance
    • Manufacturing
    • Real Estate
    • Maritime
    • Tourism
    • Transport
    • Banking & Finance
    • Trade
    • Markets
  • Economy
  • Reports
  • Technology
    • Cryptocurrency
    • Cyber-security
    • Social Media
    • Tech-guide
    • Telecom
  • Features
    • Interviews
    • Opinions
  • Lifestyle
    • Entertainment
    • Sports
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
NORVANREPORTS.COM | Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.