Mr Eric Osei-Bonsu, Managing Director of the ARB Apex Bank Limited, on Saturday asked Rural and Community banks to consider co-operative mergers to enable them to withstand the intense competition in the banking industry which threatens their survival.
He made the call at the 20th Annual General Meeting and the 25th anniversary of the Lower Pra Rural Bank Limited at Shama.
Mr Osei-Bonsu said the emerging competition in the banking sector is a "War that we must all fight together since no one rural bank can withstand the bullets of the big banks".
He said the Bank of Ghana was now more interested in the provision of financial services by accredited financial services providers and has as such removed any barriers to those who hold universal banking licenses.
Mr Osei-Bonsu said this means rural and community banks would not be protected against any "intrusion" by the big commercial banks.
He said, "The time has, therefore, come for a paradigm shift from the original concept of rural banks operating as unitary banks in a protected catchment area to the merging of the rural and community banks, leveraging on all the benefits of economies of scale and providing financial services in the rural communities".
Mr Osei-Bonsu said one key challenge that would militate against mergers is the issue of loss of identity of some rural and community banks.
He said it was better for the banks to merge and loss an identity and stay in business than maintaining the status quo and collapse.
Mr Osei-Bonsu said one key area rural and community banks needed to intensify efforts was the provision of quality services to their customers.
He said the banks need to go an extra mile to ensure that customers were satisfied with their services and also promoted these services to prospective customers.
Mr Osei-Bonsu said the banks also had a lot more to do by way of organizational restructuring, effective credit administration, cost control and reduction so as to meet the challenges of the changing competitive business environment.
He said all rural and community banks should have an Internal Audit Unit as part of their management structure, to help oversee the implementation of their systems and control and report directly to the Board or a Board sub-committee.
Mr Osei-Bonsu urged the banks to institute risk management policies to identify, assess, monitor and control risk.
Mr Nathaniel Arthur, Chairman of the Board of Directors of the Lower Pra Rural Bank Limited, said the bank made a net profit before tax of 634,141,00 Ghana Cedis for 2007.
He said this outstanding performance has been achieved through the collaborative effort of customers, Board, management, staff and shareholders.
Mr Arthur said during the period under review, the bank's total deposits increased from 5.9 million Ghana Cedis in 2006 to 8.9 million Ghana Cedis in 2007, representing an increase of 50 per cent.
He said this was an indication of the bank's rigorous deposit mobilization drive and the extent of patronage by communities in the bank's catchment area.
Mr Arthur said the bank was still the first in the Western Region and the third out of 127 rural banks in the country, in the area of deposit mobilization as at June 30, 2008.
He said the total advances disbursed under the bank's lending programme in 2007 was 8.75 million Ghana Cedis as against 6.8 million cedis in 2006, an increase of 28 per cent.
Mr Arthur said in terms of loan portfolio for the first half of 2008, the bank was first in the region and the third in the country.
He said the bank in partnership with Freedom from Hunger (FFH), a Non-Governmental Organization (NGO), established the Women in Development (WID) Project in 1992.
Mr Arthur said the project consisted of women groups formed to develop a savings culture among members.
He said as at December 31st, 2007, 137 Credit with Savings Associations had been formed with a total membership of 3,425.
Mr Arthur said the bank granted loan of 2,131,000 to the women groups in the year under review and total savings stood at 107,000 Ghana Cedis.
He said the bank's Board of Directors have recommended a dividend of 50 Ghana pesewas per share for 2007 and the total amount to be paid to shareholders as dividend is 183,850 Ghana Cedis.
Mr Arthur said the dividend is the highest to be paid so far for 2007, in the rural banking industry.
Seventeen Junior High Schools in the bank's catchment area who participated in the bank's anniversary quiz competition were each presented with a table top refrigerator.
The Shama Catholic Junior High School which won the competition was presented with a set of jersey, a football and 300 Ghana Cedis cash.
The Shama Junction Junior High School which placed second was presented with a set of jersey, a football and 200 Ghana Cedis cash while the Shama Methodist Junior High School placed third and received a prize of a set of jersey, a football and 100 Ghana Cedis cash.
Valued and loyal customers, and shareholders as well as dedicated directors of the bank were also presented with awards.