Business Hilights
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Fidelity Bank leads 35 others in Capital Adequacy Ratio in Ghana

Even though the Ghana central bank has recently set new recapitalization hurdle for the entire 36 commercial banks operating in the country, latest statistics released by the Bank of Ghana (BoG) has shown that Fidelity Bank Ghana is leading other banks in Capital Adequacy Ratio (CAR) with 30 per cent.

However, Fidelity Bank Ghana is independent and has no link with Nigerian Fidelity Bank.

The report released based on data from January to June in terms of balance sheet size, show that Fidelity Bank is closely followed by indigenous lender, GCB Bank with 26 per cent.

Business Hilights recalls that the soundness and resilience of the banking sector is rooted in the strength of its capital and liquidity position.

The report means that Fidelity Bank Ghana is among the seven leading banks that control 50 per cent of banking business in Ghana today.

The capital and liquidity positions of others are as follows: Barclays Bank  stood at 24%, Stanchart Bank 24%, Stanbic Bank 19%, Ecobank  11%, Unibank 10%.

Experts agree that the Capital Adequacy Ratio (CAR) is a key indicator of the solvency of a bank and measures a bank’s capital in relation to its risk-weighted assets. Capital acts as a cushion to absorb unanticipated losses or declines in asset values that could otherwise cause a bank to fail. It also provides protection to uninsured depositors’ money in the event of liquidation.  Adequate capital serves to protect depositors and promote the stability and soundness of the financial system.

Aside CAR, Fidelity Bank Ghana also showed resilience to harsh operating environment in Ghana as it falls into top six banks in terms of Loan-to-Deposit (LtD) ratio which is an important and widely used measure of the overall liquidity of a bank.

The position of the top banks as at June 2017 showed that whereas GCB Bank was at 30 per cent within the period under review in Ghana, Fidelity Bank followed with 41 per cent.

Stanchart Bank maintained 42%, Stanbic Bank has 53 per cent as Ecobank followed closely with 60 per cent, leaving Barclays Bank on 73 per cent.

It would be recalled that the smaller the L/D ratio, the better the liquidity position of the bank and the stronger the bank is.

Only recently, the BoG raised the capital base for commercial banks operating in Ghana from GH¢120m to GH¢400m which is equivalent to $100m or N30 billion, saying though banks have up till year end to comply, the target is to further deepen the lending capacity and solvency confidence of the financial industry.