Banking and corporate governance consultant, Dr
He explained that the overdependence on government bonds and bills which had been underperforming for some time now had put them in this state.
On
The agency announced the downgrade of
Speaking to Citi Business Newson this developmentDrAtuahene explained that the overdependence on underperforming government bonds and bills caused the downgrade of the banks.
"When a country is downgraded, any bond or bill issued by the government too is downgraded. This means that these banks were deriving income from the bonds but the three banks had a lot of concentration in the government bonds and bills. So when the country is downgraded, definitely the investment too will have to be downgraded and that means that should government default in paying the debt, it would affect the balance sheet of the three banks."
"So literally, it reflects on the concentration of their operation on the government bonds and bills which they derive a lot of revenue from. So if the government itself or the
DrAtuahene further shared the opinion that the downgrade would not affect the patronage of the banks.
"It depends on information asymmetry. A lot of Ghanaians do not know the ramification of this downgrading and the possible defaults of the bills. If a lot of us were consciously aware, then it could have affected the confidence in the system. But information asymmetry in
He said "How many of us actually read about the literature I'm talking about? A lot of information asymmetry does not make us know much about what is going on so that would actually not affect the banking system."
In the recent rating, Fitch affirmed the Shareholder Support Ratings (SSRs) of
Furthermore, Fitch downgraded the Long-Term IDR of
Fitch has simultaneously withdrawn
Copyright Ghanaian Times. Distributed by AllAfrica Global Media (allAfrica.com)., source