The Bank of Ghana Headquarters
After a recent sovereign default by Ghana, GCR Ratings said it has placed Ghanaian financial institutions on Rating Watch Negative, according to its official release.
The emerging market rating agency deems this necessary following the review of the Ghanaian country risk and financial institutions sector risk scores.
According to the firm, GCR rates three Ghanaian financial institutions: Ecobank Ghana PLC, Fidelity Bank Ghana Limited and Letshego Ghana Savings and Loans PLC, saying the rating watch negative reflects expectations of a broad negative impact on the financial sector because of selective default by the sovereign.
“It is expected that impairments will arise from the sovereign bonds held by banks, and the wider financial services sector, following the proposed/accepted resolutions by the Bank of Ghana”, the rating firm stated.
GCR Ratings said as a result, profitability across the sector could materially reduce and capitalisation be affected. This is despite various measures introduced by the Bank of Ghana to improve liquidity (and prudential management) whilst seeking to achieve banking sector compliance from related shocks.
The statement noted that GCR will take appropriate further rating actions on a case-by-case basis once the full impact of the aforementioned factors becomes clearer.
Source: Ghana Web