Banks in Ghana lost ¢7.3 billion instead of an initial ¢41.3 billion, as a result of the Domestic Debt Exchange Programme (DDEP).
According to a report, the reduction in the losses is because the 22 universal banks, auditors of the individual banks, the Bank of Ghana, and the Ministry of Finance agreed to a 16%-18% discount rate as the final terms of the DDEP implying an average NPV reduction of about 14% for government bondholders (IMF Country Report, 23/168).
The report was conducted by Dr. Richmond Atuahene, K.B Frimpong and Isaac Kofi Agyei.
“Using the 16% discount rate for the NPV for government bonds calculation resulted in DDEP losses of 22 banks stood at ¢7.3 billion with the foreign banks, private domestic banks and state-owned banks accounting for losses. The Banking sector held about ¢50.6 billion out of ¢ 87 billion restructured from Treasury bonds, ESLA and Daakye bonds excluding pension funds”, it stated.
The report disclosed that the coupon rate and maturity period of the restructured bonds currently stands at 9.1% (previously 19.1%) and 8.3 years (previously 13.8 years).
According to the revised losses, foreign-owned banks lost ¢2.995 billion, state-owned banks ¢2.377 billion, whilst private domestic banks lost ¢1.911 billion.
These revised DDEP, it said had impacted marginally on both banks’ solvency and liquidity but significantly and negatively impacted on the non-performing assets has increased from 15% in 2022 to 20% in 2023.
It continued that the DDEP impairment losses of ¢7.3 billion is due to the introduction of expected loss provisioning under the International Financial Reporting Standards (IFRS) 9 accounting standard.
It added the banking sector of Ghana marginal losses in the revised domestic debt exchange program had moderated the impact on the solvency and liquidity of the banks.
The Net Present Value losses in 2022 was 30% as against 14% losses in the revised DDEP in 2023 as a result of the reduction of the maturity period from 13.8 years to 8.3 years.
