According to him, a concerted effort is needed to improve the country’s financial sector to enable it support the developmental agenda of the government.

“For Ghana to take greater control of her economic destiny, we must be clear on the need to have a robust financial sector capable of financing the transformation,” Ken Ofori Atta said on Wednesday.

[contextly_sidebar id=”ACM4ugZ8EjaTWOFUlUaepDKq92Q6lodr”]”For the last two years alone, Ghana raised syndicated loans totaling 3.2 billion on the cocoa side.  This transaction is no doubt one of the easiest and most lucrative credit facilities for the banks involved, but the syndication is done and led by non-indigenous financial houses. Not a single indigenous bank was involved in the last 1.3 billion dollar race.”

The country’s banking sector has come under the spotlight in recent months following the collapse of Capital Bank and UT Bank earlier this year.

There are also reports that a number of the other 35 banks in the country face a similar fate unless certain interventions are made to assist them.

The Finance Minister, who addressed the 3rd Aliu Mahama Memorial Lecture at the National Theatre on Thursday, believes that the proliferation of small banks in the country, was not beneficial to the country’s growth agenda as they are constantly muscled out by the bigger multinational financial institutions that operate in the country.

He suggested that in order for local banks to make a significant impact on the market and compete more effectively both locally and globally, these institutions might have to “consolidate their forces. ”

“I think it is time we took deliberate steps to build the capacity of our local banks to become major participants in this assured multi-billion dollar money market right here in Ghana, he said.

“But if that is to happen, our banking sector needs to grow up both literally and metaphorically. In my view, the current situation where we have an oversupply of small Ghanaian banks, is not sustainable or useful to the agenda. In banking, bigger is better.  We want to see our banks talking to each other consolidating their forces to take a bigger stake in the domestic market and gather the muscle to venture beyond our borders.”

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By: Edwin Kwakofi/citifmonline.com/Ghana

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The findings come as the tax affairs of major multinationals are under the microscope after revelations in the LuxLeaks and Panama Papers scandals showed the methods used by big companies to avoid paying tax.

“New EU transparency rules give us a glimpse into the tax affairs of Europe’s biggest banks and it’s not a pretty sight,” said Manon Aubry, a tax specialist at Oxfam.

“Governments must change the rules to prevent banks and other big businesses using tax havens to dodge taxes or help their clients dodge taxes,” she said.

The report said that tax havens account for 26 percent of the profits made by the 20 biggest banks in Europe, adding up to an estimated 25 billion euros ($27 billion).

By example, Barclays, Europe’s fifth biggest bank in 2015, booked profits of 557 million euros in Luxembourg and paid only one million euros in taxes, an effective tax rate of 0.2 percent.

The report also uncovered that European banks posted 628 million euros in profit in tax havens where they employed zero staff.

In the Cayman Islands for example, France’s BNP Paribas booked 134 million euros in profit tax free without a single employee present.

Other banks reported profits in tax havens while reporting losses elsewhere.

In 2015, Deutsche Bank registered no or low profits in several major markets, while booking almost 2 billion euros of profits in tax havens.

Oxfam uncovered the data using new EU legislation that requires banks to report their profit on a country by country basis.

The law is intended to stop big banks from artificially shifting their profits to low tax wealth centres with very low, or zero, corporate tax rates.

“These rules must now be extended to ensure all large corporations provide financial reports for every country where they operate,” Aubry said.

“This will make it easier for all countries – including the poorest – to establish if companies are paying their fair share of tax or not,” she said.

Luxembourg and Ireland were the most favoured tax havens.

Europe’s 20 biggest banks posted more profits in the small EU duchy of Luxembourg than they did in the UK, Sweden and Germany combined.

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Source: AFP

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Between 2010 and September this year, the face value of transactions executed under REPOS rose by 366.1 per cent to GH¢123.14 billion.

Data from the Central Securities Depository (Gh) Limited (CSD) showed that after ending 2010 at GH¢26.42 billion, overnight lending within the interbank market and the Bank of Ghana (BoG) rose to GH¢82.16 billion in 2013.

It rose further to GH¢195.79 billion in 2014 before easing to GH¢183.30 billion in December last year.

According to data available to the GRAPHIC BUSINESS, the funds were borrowed at interest rates that averaged 21.4 per cent and 25.54 per cent.

Just like the face value of the transactions, collateral for the REPOS, which is mostly in short-term securities lodged with the CSD, also witnessed a tremendous growth within the six-year period.
From GH¢28.30 billion in 2010, collateral for REPOS rose to GH¢84.22 billion in 2013 before ending on a high of GH¢125.3 billion in the third quarter of this year.

Implications
The Chief Executive Officer of the CSD, Mr Stephen K. Tetteh, praised the development as a positive trend that showed that banks were finding innovative ways to manage their cash reserve requirements.

“Lending and borrowing are means of managing their liquidity. For instance, at the end of the day, if a bank realises that it has funds, it can lend to another bank that is short overnight or for two days and then support it with REPOS.”

“So once it’s going up, I will think that there is recognition of a better way of managing their liquidity,” he told the paper in an interview.

On the rates quoted on the transactions, Mr Tetteh said it was a reflection of the short-term nature of the funds.

Managing liquidity
The Director of Markets and Corporate, Barclays Bank Ghana, Mr Kobla Nyaletey, agreed but added that the growth also reflected the strong growth in the banking sector and the economy.

He said REPOS was the simplest and innovative way to deplore and manage excess liquidity, explaining that such transactions were not used to grow the assets of the banking sector.

“It is simply an avenue to deplore very short liquidity. It is not as if banks are relying on REPOS to fund asset growth or lending.

“It is simply the place you put any surplus that you have for just one day or where you can borrow money for just one day to meet any deficit that you may have,” he said.
He, however, explained that a spike in overnight lending from the BoG would mean that the market was short to contain the pressures from the banking sector.

“If it is that over a certain period of time banks are borrowing mainly from the central bank and not from colleague banks, then it means there is something wrong with the market; it means that the market is short,” he said, explaining that such a development would be an indication that there was a liquidity squeeze in the market.

“If it is within themselves, then it is a fair, balanced and good market. It means that one bank has enough but another does not, and so the excess has to be passed around,” he explained.

He added that the spike in the REPOS showed that the entire banking industry was properly funded such that excess funds existed for those in need.

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Source: Graphic Online

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