“This level is higher than previously anticipated due to the 2.6 percent of GDP costs associated with the formation of the Consolidated Bank, coupled with the 0.9 percent of GDP costs associated with the resolution of UT and Capital Banks,” it said in its review of the banking sector reforms.
It said “Ghana’s large debt stock, low debt affordability and exposure to foreign exchange-related valuation changes underpin our ‘Very Low (-)’ assessment of its fiscal strength, a key constraint to the sovereign’s credit profile.”
The creation of Consolidated Bank, Moody’s noted, supports financial stability when the commercial banking system faces high asset risks and is in the process of consolidating to meet new capital requirements of GH¢400million minimum by the end of this year from the previous GH¢120 million.
The Bank of Ghana last week consolidated the deposits, other systemic liabilities and viable assets of five insolvent banks into a new, wholly government-owned bank called Consolidated Bank Ghana Limited.
Government capitalised the bank with GH¢450million – 0.2percent of GDP, and endowed it with a GH¢5.76 billion bond – US$1.2billion or 2.4 percent of GDP, to cover the gap between the liabilities and viable assets it has assumed.
Government intends to offload its shares within a period of two years to the Ghanaian public.