Majority of Banks Impacted by DDEP Meet Recapitalisation Targets, IMF Says
Most of the thirteen banks that recorded capital shortfalls in the aftermath of the Domestic Debt Exchange Programme (DDEP) have met or surpassed their recapitalisation targets as of end-2024, the International Monetary Fund (IMF) has revealed.
The Fund attributes this progress to strong post-DDE profitability and support from the Ghana Financial Stability Fund (GFSF), noting that these banks are on track to restore their Capital Adequacy Ratios (CAR) to the regulatory minimum of 13% without regulatory reliefs by end-2025.
However, the IMF in its latest Country Report on Ghana noted that a handful of banks, including a state-owned lender, remain materially behind on their recapitalisation timelines.
“These banks are subject to intensified BoG monitoring and corrective measures to accelerate recapitalization plans to reach CAR of 13% (end-March 2025) by end-2025,” the report stated.
According to the Fund, the lagging banks have been hampered by delayed capital contributions from shareholders, elevated levels of non-performing loans (NPLs), and the slow booking of credit impairments flagged in the Bank of Ghana’s (BoG) 2023 asset quality reviews.
The IMF added that the implementation of the World Bank-funded segment of the GFSF, pending parliamentary approval, could provide the necessary capital support for some of the undercapitalised banks, provided they meet eligibility criteria.
Meanwhile, the BoG has stepped up its oversight and enforcement efforts on five private and state-owned banks that failed to comply with recapitalisation requirements as of end-December 2024.
These institutions are currently executing revised recapitalisation plans approved by the central bank, with the aim of rectifying past weaknesses and addressing recent underperformance.
They are also expected to implement corrective measures targeting shortfalls in shareholder capital commitments, high NPLs, and incomplete provisioning of credit losses as identified in the 2023 asset quality assessment.
The BoG’s intensified supervision is intended to ensure full compliance with the regulatory CAR threshold of 13% by the end of 2025.
