The Chartered Institute of Bankers (CIB) has said the steps being taken by the Governor and the Bank of Ghana to sanitize the banking sector are appropriate and should be commended.
“The institute is confident these reforms would place the Ghanaian financial sector on the right pedestal to be more responsive to the needs of the economy and create a resilient banking environment,” Patricia Sappor, President, CIB, said in a statement.
She also assured all stakeholders that the institute is committed to holding its members to the Code of Conduct and Ethics of the profession. “Any member found culpable by the Bank of Ghana in the investigations into the failed banks would be subjected to the disciplinary procedures of the institute,” she added.
She noted that the institute, after interrogating and understanding all the issues surrounding these developments, considers the actions taken by the Central Bank necessary and critical to the growth and development of the financial sector.
She added that the Bank of Ghana, as the regulator, has a responsibility of ensuring sanity in the banking environment in order to increase customer and investor confidence in the banking sector and Ghana as a whole.
After approving the purchase and assumption of assets and liabilities of the UT and Capital Banks by GCB Bank in August, 2017, the central bank a couple of weeks ago merged five insolvent banks in one single swoop into the newly established Consolidated Bank, which is 100percent owned by the government.
The Bank of Ghana, in statements, noted that the reasons for the collapse of the five banks –uniBank, Sovereign, Beige, Royal and Construction banks– are poor corporate governance practices, liquidity challenges and poor lending practices leading to non-performing loans, among others.
The Central Bank has also introduced new regulations such as bank recapitalisation (from GH¢120million to GH¢400million with a December, 2018 deadlline), and Corporate Governance directives (section 56 of the Bank and Specialised Deposit-Taking Institutions Act 2016, Act 930).
Other measures and directives include IFRS 9 and Basel II implementation by banks which are all meant to purge the banking industry and make the sector more poised to take on its role as a catalyst to the country’s economic growth and development.
“It is the candid view of the Chartered Institute of Bankers, Ghana, that banks need the right combination of formidable business models and regulatory compliance to survive. Responding to the progressively more sophisticated and competitive banking sector requires the crafting of new strategies capable of positioning banks on a path of sustainable growth,” she said.
The institute also underscored the need for all stakeholders particularly banks to uphold the ‘critical imperatives’ for achieving banking success which include regulatory compliance, proactive risk management and strong ethical culture.
She added that the institute is confident the industry will soon recover and the dividends from these tough but necessary actions of the Central Bank, will pay off as the various regulations will primarily help protect depositors’ funds and ultimately help banks support the economic development of Ghana.