19 banks owed under the ‘legacy debt’ received second payment in the first quarter of September.
This was part of schedule of payment as agreed between the banks and government.
The Ministry of Finance, the Bank of Ghana (BoG), and the Ghana Bankers Association in August announced a roadmap aimed at clearing the Volta River Authority’s (VRA) ‘legacy debt’ of GHS4.4 billion, after an initial payment of GHS250 million.
The President of the Ghana Bankers Association, Alhassan Andani told journalists in Accra at the sidelines of a BoG and IFC Partnership launch, “We have concluded everything after September, so the down payment came through.
We have GHS250 million upfront payment and we’ve also gotten the September first quarterly payment,” he said.
Mr. Andani was optimistic that the banking system will begin to reclassify the non- performing assets that were captured under the debt.
He stated that the discussion also addressed the the FX differential issues raised by the Bulk Oil Distribution companies(BDCs). The BDCs have raised concerns over differences in the exchange rate as the time the loans were acquired to purchase crude oil for the VRA to power thermal plants in the country. “So government conducted an audit of what the exchange differentials were with the BDCs, the banks, and the external auditor.
We clearly understand what is now due the banks, and we are in the process of getting that money paid,” Mr. Andani explained.
“Everything has been firmly agreed that before the end of the year the payment due from government on the FX differential will be made.
That will bring down any non-performing assets,” he added.
As at August 2016, the VRA was indebted (legacy debt) to about 19 commercial banks to the tune of US$ 300 million.
Finance Minister, Seth Terkper announced in that government has made an initial GHS250 million to the banks after which a road map was designed to pay the rest of the debt.
Mr. Andani commenting on the banking industry performance has indicated that Non-Performing Loans (NPL) of banks should reduce significantly before the end of this year.
Alhassan Andani’s assurance follows a substantial increase in Impairment Charge on loans and Advances by some listed banks, like Ecobank, CAL, SG and Standard Chartered Bank.
The third quarter earnings revealed a rising Non-Performing Loans despite the payment of a fraction of energy sector debts, which had contributed to these rising NPL’s.
Ecobank’s NPL for the nine months ending September 2016 went up to GHC44 million from GHC40 million for the same period in 2015.
Standard Chartered Bank also saw its impairment charge on loan advances increase to GHC61 million for the first 9 months of this year from GHC38 million in 2015.
The development was interesting, due to the fact that, government recently announced the payment of some energy sector debts, with an initial payment of some GHC250 million.
This industry players say should have impacted on the numbers positively but Mr Andani says these payments should reflect in the last quarter results.
In a related development, the much talked about Bulk Oil Distribution Companies (BDCs) debts, can be put at $300 million dollars, accounting firm, Ernst and Yong has said.
The firm was commissioned to audit the debts of the BDC’s and Mr Andani says this should pave the way for the payment of these debts very soon.
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(Via: NewsGhana)