Central Bank to revoke some banking licenses

Six out of the fourteen banks in country are at risk of having their banking license been revoked by the Central Bank of The Gambia due to their inability to raise their minimum capital requirement to D150 million by December this year, as directed by the Central Bank of The Gambia
Two years ago, the Central Bank of The Gambia raised the minimum capital requirements of commercial banks to D150 million and D200 million to be observed by end December 2010 and 2012 respectively “in order to strengthen the country’s banking system”.
Hitherto, the minimum capital requirement was pegged at D60 million.
The Minister of Finance, Hon Abdou Kolley, while tabling the budget statement and economic policy financial year 2011 before the National Assembly in Banjul on Friday, said the latest assessment indicates that eight of the fourteen banks had already met the capital requirement of D150 million.
“The six banks that are yet to meet the requirements are being rigorously monitored by the Central Bank of The Gambia,” he said.
Although the Central Bank of The Gambia is optimistic that all banks would observe the capital requirement, the Finance Minister said: “The CBG is resolved not to grant request for forbearance if a bank fails to meet the requirement and to mitigate systemic risk that may arise from the revocation of a banking license, the CBG shall take the following actions: invoke section 45 of the Banking Act 2009 and take over the bank, thereafter the CBG may invoke Sections 48 and 51 of the Banking Act 2009 and place the institution in conservatorship to be sold, merged or restructured, and apply to the High Court for compulsory liquidation under Section 52 of the Banking Act as a last resort.”
While announcing the increment of the minimum capital two years ago, the Central Bank says the action has been taken in view of its desire to deepen the financial sector and "in pursuance of the Gambia’s Vision 2020 aim of transforming the country into a financial centre"
Thisday, a Nigerian newspaper has reported that the Managing Director of GTBank said the new capital base had increased the challenges of banks operating in that country.
Mr Lekan Sanusi said only the creative financial institutions were likely to survive the industry competition and deliver returns commensurate to the expanded capital base.
The Gambia, which used to be serviced by less than four commercial banks until a few years ago, has in recent times been affected by the phenomenon of an upsurge in the number of banks registered here, mainly from Nigeria.
GTBank MD said the Gambia could only take a certain number of banks.
He was quoted as saying: "But do we really need as much as 14 banks in a relatively small country like The Gambia? If you divide the number of banks in this country by the population of about 1.7 million, you have an average of 100,000 people per bank. Revenue is going down. What I know is that in the long run, people will count their numbers.
At the end of the 2009 financial year, the Gambia’s banking industry recorded total loss of about 45 million Dalasis. Ten of the banks declared losses.