Stakeholders in the banking sector have interrogated proposals by experts calling for the consolidation of banks in the country through acquisitions and mergers.

The sticking points have been whether there should be any such attempt and if it should be engineered by the regulator, the bank of Ghana, by raising the minimum capital requirement or encouraged by the use of incentives.

Colin Bereton, Senior Partner and Member of the Supervisory Board, PwC UK speaking to the B&FT said: “I think we are going to see consolidation of banks generally around the world, and that will happen more in Europe. What might happen in African countries is just as the case in Nigeria. I think that 27 banks in a country of this size are too many, and I think there should be some kind of consolidation.”

Any such attempt at consolidation, he argues, “will depend on customer confidence and on the effectiveness of the regulatory environment. Because if you have a concentration, that’s fine but you got to have the right protections in place. In a lot of industries, we find four very big very strong players, providing sufficient incentives, but adequate protection for customers as well.”

He proposed incentives to encourage banks to consider mergers and acquisition: “He I think it depends on a whole host of business factors, but certainly the suggestion is to encourage it through tax incentives to encourage people to go that direction.

Mr. Bereton was speaking to the B&FT on the sidelines of the 2014 PwC's Financial Services Executive Breakfast Meeting held on the theme: “the future of banking in Ghana-what's next?" to present the PWC's 2014 Ghana Banking Survey report.

Mr. Asare Akuffo, Managing Director of HFC Bank in the next three years envisage the acquisition of Savings and Loans Companies by Universal banks in the country. “Banks may acquire some of the S&LC like Fidelity has done. We expect that to happen because S&LC need capital going forward, and banks will be able to inject capital.”

Fidelity Bank Ghana Limited recently agreed in principle to acquire 100 percent ownership of ProCredit Savings and Loans Company Limited as part of a strategy to leverage the latter’s’ strong SME presence and processes.

The transaction, which is subject to Bank of Ghana and shareholders’ approval and the completion of other closing conditions, will entail Fidelity purchasing all of the shares currently held by the two shareholders, PCH and the DOEN Foundation of the Netherlands.

Mr. Philip Owiredu, Chief Financial Officer of Cal Bank, while not supporting an engineered consolidation, believes that there is the need for growth.

He said: “The banking system, as proffered by the central bank, needs to see some sort of growth, whether it has to be engineered or as to whether we have to leave the market to decide. I would expect that it’s going to be both.

We should see the Central Bank coming up with capital requirements that would see the banks being well-capitalised and being able to take on quite a reasonable size of transactions and also allowing the banks themselves to see which banks are best fit to be able to have that sort of marriage that would allow them to see their businesses grow.”

He told the B&FT that: “In terms of syndication, there are quite a few going on. I think there is an opportunity for more to go on. If you look at the size of the transaction that is financed off-shore the question is whether even if there is syndication, we would have the capacity to even do it.

I think we need to see some sort of growth in terms of the size of the banks, deposit growth that will be trigger by growth in the economic activity which will naturally see banks grow and be able to have resources to be able to take on big size transactions.”

Mrs. Pearl Esua-Mensah, Deputy Managing Director of UT Bank said: “There should be some collaboration between banks and if we work together more we could do a lot more as local banks and don’t have to depend too much on the foreign bank, so we definitely we definitely need some sort of collaboration but as to the form of that collaboration there is a bit of time yet to wait and see what would be best.

Asked whether the limited syndication in the banking sector should be an indication of the need to consolidate, she said: “I think there are quite a few syndications. UT Bank has been part of a few syndications. To be very frank, the transactions are really big, and some of the banks do work together. The international banks can rely on the balance sheet of their parent company. The local banks probably don’t get as many of those big-deal tickets as we should but when we do, we do collaborate and syndicate.