No bank can survive if just one third of its customers withdraw deposits at the same time – Analyst

A Financial Analyst, Mr Kwasi Yirenkyi has said that no bank, whether foreign or locally owned, can survive in any economy if just one third of its customers withdraw all their deposits at the same time.

He said it does not matter whether the bank is multinational or not, it just cannot survive if it happens that one third of its customers move their funds from that bank simultaneously.

Mr Yirenkyi was speaking exclusively to 3news.com in reaction to the court action taken against the Chief Executive Officer of the defunct Beige Bank, Mr Michael Nyinaku following the collapse of some nine domestic banks during the recapitalization.

The nine banks that went under during the cleanup exercise in the financial sector by the Bank of Ghana are UT, Capital, The Beige Bank, The Construction Bank, Sovereign Bank, Unibank; The Royal bank; Heritage Bank and Premium Bank.

Mr Nyinaku was granted ¢200million bail by the court on Tuesday November 8 after being slapped with new charges of theft, money laundering after he was earlier accused of stealing over GH¢340 million at a circuit court.

Analyst, Mr Yirenkyi intimated that panic withdrawals resulted in the inability of the collapsed local banks to meet the new capital requirement set by the central bank.

“Panic withdrawals following the announcement that banks that count meet the new minimum capital requirements weakened some of the domestic banks. That played a part in their inability to meet the new capital requirement leading to their collapse,” he said.

“Let me place it on record that no bank, it doesn’t matter whether it is locally or foreign owned, can survive if just one third of its customers withdraw all their deposits at the same time. Not all the customers, just one third, that bank will collapse.”

He also added that there was no way the local banks were going to c0metet with the foreign-owned banks in meeting the requirement.

“Asking all the banks to raise the same capital requirement was hurting to the local banks,” he stressed.