The Ghana Association of Banks (GAB) has directed commercial banks not to sign unto the amended debt exchange offer over uncertainty surrounding the impact of the debt restructuring on the banking industry.
The association wants its concerns addressed before accepting the debt exchange offer, according to a letter sent to the managing directors of banks sighted by 3Business.
GAB told member banks that may want to consider the debt exchange in its current form to formally inform the association before doing so.
“…From the uncertainty surrounding the programme, GAB recommends that all banks must stay any further movement on the exchange until our demands have been met. However, in the event that a bank may have to move forward to exchange, the MD/CEO must inform the CEO of GAB directly of the decision,” according to the letter sent to the banks.
The decision was made after a high-level multi-stakeholder meeting involving GABS, the Vice President, the Minister for Finance, debt management advisors, and financial sector regulators, including the Bank of Ghana.
The intercepted document suggested that the leadership of the banking group at the meeting put forward several demands to mitigate the impact of the domestic debt exchange programme on the banking sector.
Ghana signed a staff-level agreement with the International Monetary Fund for a $3 billion bailout package. However, the board’s approval is hinged on a successful debt restructuring that will reduce the country’s debt servicing obligations.
3Business reported last Friday that banks were hesitant to sign unto the programme, adding to the list of rebellions fighting the domestic debt exchange.
“If the debt exchange programme is implemented in its current form, the banking sector would lose about GH¢ 5.9 billion in revenue alone, incur a loss before tax of about GH¢ 14.5 billion and a liquidity gap in excess of GH¢ 20 billion,” the document stated.
The banks warned that the debt exchange would lead to massive job losses as they will have to scale back on their operations. —3Business
