{"id":263484,"date":"2016-10-31T06:00:53","date_gmt":"2016-10-31T06:00:53","guid":{"rendered":"http:\/\/citifmonline.com\/?p=263484"},"modified":"2016-10-31T06:00:53","modified_gmt":"2016-10-31T06:00:53","slug":"bog-to-announce-economic-capital-before-minimum-capital-nana-otuo-acheampong","status":"publish","type":"post","link":"https:\/\/citifmonline.com\/2016\/10\/bog-to-announce-economic-capital-before-minimum-capital-nana-otuo-acheampong\/","title":{"rendered":"BoG to announce economic capital before minimum capital- Nana Otuo Acheampong"},"content":{"rendered":"<p>Despite reports that the Bank of Ghana(BoG) may compel all banks in the country to meet the new capital requirement shortly, Banking Consultant, Nana Otuo Acheampong has told <strong>Citi Business News<\/strong> the regulator is yet to come out with an economic capital requirement after which the regulatory capital will follow.<\/p>\n<p>The economic capital, according to him, will assess the economic activities of banks in the country to determine the economic capital structures under which they will operate.<\/p>\n<p>Speaking to <strong>Citi Business News<\/strong>, Nana Otuo Acheampong disclosed that the International Monetary Fund (IMF) is currently meeting with the central bank to design an economic capital structure for commercial banks after which the regulatory capital will be announced early next year.<\/p>\n<p>\u201cWe have regulatory capital, and economic capital. Regulatory capital is where the regulator sets a one side stator capital and the economic capital is based on the economic activities of the banks involved, so if you are small, your capital will be small and if you are big your capital will be big depending on your economic activities,\u201d he said.<\/p>\n<p>He explained that the procedure requires a thorough assessment hence plans are already underway to classify commercial banks based on economic capital.<\/p>\n<p>\u201cAs we speak the BoG has set up an economic committee together with the IMF to look at the establishment of an economic capital as opposed to regulatory capital and they are due to report next year,\u201d he said.<\/p>\n<p>Providing some more explanation on the differences, Nana Otuo Acheampong stated that economic capital will be linked the economic activities of the banks.<\/p>\n<p>Economic capital is the capital that you determine internally according to your economic activities, lets take for instance Barclays Bank versus Bank\u00a0 of\u00a0 Baroda, the economic activities of Barclays bank is far higher than the economic activities of\u00a0 Baroda, but under regulatory capital both of them are supposed to have the same type of minimum capital,\u201d he said.<\/p>\n<p>He, however pointed out that \u201cwhen we move to economic capital you would expect their capital structures to be different because the less activity, the less capital you have,\u00a0 so as a requirement of Basel II, they implored regulators to look at aligning \u00a0economic capital with regulatory capital,\u201d he stressed.<\/p>\n<p>&#8211;<\/p>\n<p>By: Lawrence Segbefia\/citibusinessnews.com\/Ghana<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Despite reports that the Bank of Ghana(BoG) may compel all banks in the country to meet the new capital requirement shortly, Banking Consultant, Nana Otuo Acheampong has told Citi Business News the regulator is yet to come out with an economic capital requirement after which the regulatory capital will follow. The economic capital, according to [&hellip;]<\/p>\n","protected":false},"author":14,"featured_media":230182,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[121,32,171],"tags":[2002],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>BoG to announce economic capital before minimum capital- Nana Otuo Acheampong - Citi 97.3 FM - Relevant Radio. 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