Domestic Debt Restructuring and the Banking Sector Threats: Possibility of Standard/Stanbic Bank to Re-capitalize

domestic debt restructuring and the banking sector threats possibility of standardstanbic bank to re capitalize

Africa’s largest bank Standard/Stanbic Bank, is considering re-capitalizing its Ghanaian branch after debt provisions due to Government’s Debt restructuring.

Chief Executive, Sim Tshabalala made this pronouncement in an interview stressing that the bank is ready to make provisions to cover more than half of its holdings in Ghana’s debt.

It may become necessary for us to inject capital in that business and we will, at the appropriate time, Chief Executive Officer, said in an interview on Thursday.

Banks in Ghana have struggled financially following the government of Ghana’s restructured local debt amounting to ¢83 billion($6.8 billion) in its quest to secure an IMF bailout of $3 billion.

President Akufo Addo’s government took a dramatic turn to seek a bailout from the International Monetary Fund to salvage the country’s ailing economy, a move that was previously and persistently disapproved by the country’s Finance Minister Ken Ofori-Atta.

Many economists and financial analysts have advocated for government to consider the adverse consequences of its domestic debt restructuring program on banks and take steps to avert further losses in the banking sector.

Many banks have since been hit with the program in the country and many fear some banks including indigenous ones may not be able to survive.

Standard Bank on Thursday joined FirstRand Ltd. in accounting for the impairment. Ghana has an estimated ¢576 billion of public debt.

Standard Bank disclosed earmarking 1.5 billion rand ($81 million) to cover potential losses arising from Ghana’s loan-restructuring program. Standard bank added that its total holdings of both domestic and onshore dollar-denominated bonds is about 2.6 billion rand.

We believe that the pain that we have taken in Ghana is exquisite,” Tshabalala said. “The numbers are very large, but we have a portfolio, and the portfolio is calculated to do that. Notwithstanding the impact of Ghana, our Africa regions business performed very well.


They’ve been very tough in the negotiation process, as you can expect, because they have a public policy role to play,” the CEO said. The government has “extracted what they consider to be the appropriate bargain, which while appropriate from a policymaker and a government point of view, it’s been painful for holders of that debt. He added.

Standard Bank Shares

Standard Bank’s shares, have advanced 7.3% in 2023, and were up about 1.6%, prior paring gains to 0.6% by 3:47 p.m. in Johannesburg.

Standard bank has assured that it remains resolute and committed to Ghana as it plans to leverage its “fortress balance-sheet” to capitalize on opportunities in the sector and increase its market share.

We’ve made a commitment to cooperate with policymakers to have the appropriate solutions, and we stand by our Ghanaian business, we stand by our Ghanaian clients, and we take a long-term view, we will look through the volatility, Tshabalala said.

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