With globalization, development in IT and monetary liberalization, many international locations have seen penetration of overseas banks into their banking trade. On this matter, Ghana will not be an exception. Ghana is positioned in West Africa and shares borders with three francophone countries- Togo (East), Cote D’ Ivoire (West), Burkina Faso (North), and south is the North Atlantic Ocean. The nation is blessed with pure assets.
Ghana is seeing great progress in her banking system. This progress is marked by improve in branches, improve in financial institution measurement and use of IT to offer providers to shoppers. Contributing to this progress is modifications in regulation and supervision and development in Info Know-how. Of the 26 banks working within the nation, 25 of them are working as common banks, and one working as each offshore and common financial institution. The presence of overseas banks within the nation exceeds the presence of home banks. Out of the 26 banks, 14 and 12 are overseas and native banks respectively.
Globally, many elements affect their entry into host international locations. These elements have been recognized as location-specific benefits of the host nation (e.g. inhabitants measurement, safety, market construction and regulatory construction), ownership-specific benefits of the overseas financial institution (e.g. branding, creditworthiness, measurement of shoppers, expert work drive) and internalization-specific benefit. These elements mixed collectively affect the entry motive selections, entry mode selections, market orientation choice and administration management choice of those banks. Thus, the entry into Ghana is influenced by these elements.
Their entry in Ghana dates again to the colonial period. The primary entry was in 1896 by the Financial institution of British West Africa (BBWA), now generally known as Normal Chartered Financial institution (SCB). Its essential object was to import silver cash from the Royal Mint to expatriate firms and the colonial administration. Within the colonial period, the banking trade was established with the item of offering monetary providers for the British buying and selling enterprises and the British Colonial Administrative. For this causes the native individuals within the Gold Coast have been financially excluded from the banking system.
In 1917, one other overseas department was included within the nation. That is the Barclays Financial institution, which was then generally known as Barclays Dominion, Colonial and Abroad Financial institution. This introduction elevated the presence of overseas banks to 2, with indigenous banks absent. In 1975, SSB Financial institution was additionally included. Monetary liberalization within the 80s and its deepening within the 90s noticed the entry of latest banks into the trade. From 1990-2000, 4 overseas banks entered the banking system, thus rising the presence of overseas banks to seven. In contrast to the earlier years, seven information banks have been included from 2004 to 2010.
Regulating their entry is the accountability of the Central Financial institution. Their entry modes into the nation are by means of acquisition, subsidiary and three way partnership. Earlier than the issuance of banking license the next are legally required to be submitted by banks: 1. Draft by legal guidelines 2. Meant organizational chart 3. Monetary projection for the primary 5 years and space of specialization meant. 4. Monetary info on essential potential shareholders 5. Background/expertise of future administrators and managers. 6. Sources of funds to be disbursed within the capitalization of latest banks. 7. Market differentiation meant for the brand new financial institution. The license might be revoked by the central financial institution on the account of false, or deceptive or inaccurate info by or on behalf of the applicant financial institution; noncompliance with phrases and situations stipulated within the license, and failure of financial institution to start enterprise inside one 12 months from the date the license was issued.
Although their entry is crucial for a aggressive banking, their extreme numbers may result in macroeconomic instability and unstable authorized framework. For this causes, the Central Financial institution has adopted an open however selective licensing insurance policies to manage their entry.
In conclusion, entry of overseas banks in Ghana dates again to the colonial period. Time of entry varies from one financial institution to the opposite. Entry is selective and consciously managed. Entry modes are restricted to joint ventures, subsidiary and acquisition.