The central bank of Ghana recently released new directives to strengthen corporate governance in the banking sector, ahead of the new recapitalisation requirement that enjoins commercial banks in the country to scale-up their minimum capital requirement to US$400million by December, 2018.
Last week Monday, the Bank of Ghana released new corporate guidelines referred to as ‘transitional provisions’ aimed at guiding the banks ahead of the new capital requirement. The directive caps the tenure of managing directors (MDs) and CEOs of regulated financial institutions at a four-year maximum, subject only to two additional terms.
Corporate governance expert Dr. Richmond Atuahene says the move by the BoG is a step in the right direction, as it will go some way to restore sanity to the banking sector since it will mean that the fate of depositors will not solely lie in the hands of a few people, or one person, forever.
Dr. Atuahene is however tasking the BoG to ensure that these directives are enforced to the letter, and those who flout the directives should be punished to ensure a sanguine banking sector. Thus, it is not merely issuing directives but the ability to enforce its provisions that will see a change from the past, when weak supervision on the part of the regulator allowed these infractions to fester beyond repair.
Now that the BoG is purposed to strengthen its corporate governance directives, some amount of hope is being restored to a banking sector that has almost completely eroded public confidence and trust. Some of the problems in the banking landscape can simply be ascribed to abuse of authority and banking regulations, which has seen not less than three local banks face liquidity issues while one is under administration.
The new directives, if enforced, will go a long way to strengthen corporate banking governance and protect depositors’ life-savings – which is crucial.