Dominant shareholding, weak control systems, no risk monitoring & regulatory breaches caused banking sector cleanup”- BOG Asst. Dir.

Assistant Director and Deputy Head of Banking Supervision, Bank of Ghana (BOG)  Ismail Adams has attributed the banking sector cleanup exercise by the Central in Ghana to banks having dominant shareholders directing its affairs, directors not having skills that were required for the job, directors having absolute control and authority, weak control systems, lack of risk monitoring and regulatory breaches.

ISMAIL ADAMS, Assistant Director & Deputy Head of Banking Supervision, Bank of Ghana

Since 2017, Ghana has witnessed revocation of licences of 9 commercial banks, 2 finance houses, 386 microfinance and micro credits companies, 53 fund managers, 23 savings and loans firms as part of the banking sector clean-up exercise due to breaches of Act 930, severe impairments of their capital and inability to meet the regulator’s new minimum capital pegged at four hundred million Cedis (GHC 400m).

Among the collapsed banks were UT Bank, Capital Bank, Sovereign Bank, Construction Bank, Heritage Bank, GN Bank, Unibank and others.

The shocks of the banking sector cleanup exercise by the BOG led to panic withdrawals, locked-up of depositors’ funds, investments, savings and eroded investor confidence.

Speaking at UPSA Quarterly Banking Roundtable on corporate governance and risky dealings in banks on Thursday 15 July 2021via zoom monitored by African Editors, the BOG Assistant Director and Deputy Head of Banking Supervision Mr. Adams said “At the core of corporate governance, the bank of Ghana looks at doing the right thing, working with transparency, accountability, honesty, impartiality, integrity, trustworthiness, Respect for due process as well as strong commitment to ethical values. The introduction of the corporate governance directive of 2018 and the fit and proper person directive has advanced a massive or significant improvements in the Banking sector”.

According to Mr. Ismail Adams, corporate governance is how to balance the interests of the various stakeholders ( shareholders, management, client etc.) in a company. However, in banking, the most important stakeholder is the customer or client.

Mr. Adams noted that “Some of the legal and regulatory framework for related party transactions and conflicts of interest for financial institutions and companies are Banking of Act, Company’s Act ( Act 992, Risk management Directives or Framework which is approved by the board of Directors”.

The 2021 UPSA Quarterly Banking Roundtable which focused on the theme : Corporate Governance and Risky Dealings in Banks, was sponsored by Absa Ghana with supports from Joy 99.7, Asaase Radio and Africa Editors/africaneditors.com (Global Voice of Africa)

Source : africaneditors.com