ARB Apex Bank

Citi Business News has gathered that many Rural and Community Banks (RCBs) across the country are likely to collapse in the coming weeks if ongoing developments in the sector are not dealt with anytime soon. 

A report prepared by ARB Apex Bank which is the mini central bank for RCBs under the supervision of bank of Ghana has revealed that about 20 RCBs are in financial distress. 

The report which was prepared upon the request of the Bank of Ghana (BoG) and subsequently forwarded to the Ministry of Finance and sighted by Citi Business News revealed that some Rural and Community Banks had to be bailed-out to the tune of GHC5.7million last year alone by the ARB Apex Bank. 

It is unclear which specific banks were bailed out but according to the bank 20 of those banks were in serious financial distress. The report also revealed that out of the 135 rural and community banks only 15 were classified “strong” by the Apex Bank as at September 30, 2013. 

The report further revealed that the performance of the RCB’s as at September 30, 2014 further declined by the end of September 2014 where only 10 of the RCB’s were deemed “strong” as compared to the 15 recorded in the previous year.

The report further states that the performance of 64 RCBs banks were satisfactory, 49 performed fairly, with 12 of the RCB’s performing marginally while 6 of the RCBs performance was unsatisfactory.

The ten page report also identified the major challenge confronting the Apex Bank is the increasing number of distressed banks and the late submission of weekly liquidity returns by some RCB’s which is used to review their positions. 

According to the report as at September 2014, 54 rural and community banks had not met the minimum paid-up capital of GHC 300,000 while 31 had also not meet the Capital Adequacy Ratio requirement of 10%. 

43 of them had also not meet the 8% primary reserve requirement and 64 of those banks had also not met the 30% secondary reserve requirement. The report says in 2014 only 18 out of 141 RCB’s were inspected on-site compared to 21 RCB’s inspected in 2013. 

The Apex Bank attributed their inability to inspect more RCB’s in 2014 to inadequate staff.