The Managing Director of CAL Bank, Frank Adu Junior, has called for a proper assessment of the Bank of Ghana’s new process of releasing dollars to banks through auctioning.
The Central Bank, on Wednesday [November 30th], commenced the auctioning of dollars to banks through a bidding processing targeted at stabilizing the cedi.
The Bank of Ghana through this process will auction 60 million dollars in three batches of 20 million dollars each; the first in November and two in December.
The cash is from proceeds from the 1.8 billion dollars cocoa syndicated loan.
But commenting on the process, Mr. Adu was of the view that the process could be counterproductive if not properly assessed.
“It is a very slippery slope and it may take a while to stop the currency from sliding…if the auctioning of the cocoa loan proceeds by the central bank works, then there wouldn’t be a problem. But the reverse will be true,” he stated.
Mr. Adu added, “If we are not careful, people will just go to the central bank that is what I believe is the predictability of the market that will dampen the spirit of banks to go out there and look for FX.”
In addition, the CAL Bank MD suggested that the former practice where banks were required to develop systems to meet their forex needs risk being affected.
According to him, the current practice also has the likelihood for the central bank to interfere in the rather free market system.
“I preferred the former system where you approached the central bank based on one’s business requirement and when you are not able to acquire enough forex, the company is compelled to develop strategies to generate forex to conduct more trade finance businesses.”
Meanwhile the bank has declared a profit after tax of 90,920,000 cedis for the third quarter of 2016.
The figure represents 23.3 percent drop in profits for the same period in 2015 which stood at 118,492,000 cedis.
Speaking at CAL Bank’s fact behind the figures session on Wednesday, Frank Adu Jnr was optimistic a major challenge to the financial performance; Non-Performing Loans (NPLs) should be addressed by the end of the year.
Mr. Adu explained that the government’s commitment to pay the BDC and VRA debts should translate into an improved performance at least by the end of year.
“This year, we may be very aggressive and decide that even though we will get paid as there is evidence to the fact. For instance banks that were affected by the VRA debts have received some payments for both the VRA and BDC debts; with payments for the former totaling about 500 million cedis,” he opined.
“I think that it is important as the process starts to make some provisions but I do not think my shareholders will be happy about it because they are used to getting a lot of dividends,” Frank Adu added.
Join GhanaStar.com to receive daily email alerts of breaking news in Ghana. GhanaStar.com is your source for all Ghana News. Get the latest Ghana news, breaking news, sports, politics, entertainment and more about Ghana, Africa and beyond.
(Via: CitiFM Online Ghana)
