CAL, Stanbic, others comply with Corporate Governance Directives as ambiguity persist over interpretation of Directive No. 44

In 2018, I published an article titled “Financial market reforms: 2 Bank CEOs and 15 non-executive directors to go home after December 2018?” In that article, I sought to answer two questions:

  1. What does Bank of Ghana’s Corporate Governance Directives on age limit and tenure for CEOs, board chairs and non-executive directors really mean?
  2. Are there any legal risks to be concerned about?

To answer the first question, I took a position by applying a purposive approach to interpreting Corporate Governance Directives 44, 45 and 51. I subsequently applied that interpretation to the market environment to assess level of compliance at the time. The findings are restated here to lay foundation for this article, which is a sequel. The focus of this article is to assess progress on compliance with BOG’s Corporate Governance Directives most of which came into full effect on January 1, 2019. A brief recap of the theoretical foundations and key findings that was discussed in the first article is needed to offer context.

Interpreting Directive 44, 45 and 51

  1. Section 44 of the Banks and Specialised Deposit-Taking Institutions Corporate Governance Directive, 2018 is clear, when interpreted using paragraph 2(a) of the Transitional Directives (see Figure 1); the term of office for a CEO of a regulated financial institution shall not be more than 12 years cumulatively, constituting three 4-year terms.
  2. That notwithstanding paragraph 2(b) of the Transitional Directive present some ambiguity. Essentially 2(b) presents two scenarios; (1) if say a CEO had his contract renewed in February 2018 for 4 more years, but that CEO has served in that capacity for more than 12 years then his current tenure may run in full till April 2021 but shall not be renewed thereafter.
  3. An alternative interpretation seem more probable given the phraseology that concludes 2(b), […] “and in which case”. Using a scenario to illustrate, let us suppose that this CEO has spent more than 12 years already as Managing Director, and his contract was renewed in February 2018 (prior to the introduction CG Directives) for 4 more years, then the CEO “may be given up to 31st December 2018 to wind down” as the text indicates.
  4. Admittedly, the imprecise phraseology contributes to the ambiguity contained in Paragraph 2(b) [compare same with 3(a) and 3(b) or 4(a) and 4(b) of the Transitional Directives, which see quite precise].
  5. Leaning on the same precision as has been applied to Paragraph 3 and 4 for Chairpersons and no-executive directors, it is reasonable to argue that CEOs who have served in that capacity for more than 12 years may be given till December 2018 to wind down.
  6. Admittedly, this interpretation has not validated by officialdom and therefore remains speculative.
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Using that interpretational framework for Corporate Governance Directive No. 44, 45 and 51, a market scan was conducted in April 2018 to test compliance. Findings Restated below:

  1. It was found that CAL Bank and Prudential Bank MDs had served for more than 12 years by the time Bank of Ghana introduced the Corporate Governance Directives in March 2018.
  2. Chairpersons of Nine (9) banks (see Figure 2) had served for more than six (6) years and were required to exit as mandated by Transitional Directive 3a.
  3. Six (6) Non-Executive Directors from two banks, having served for more than nine (9) years, were affected by Transitional Directive 4a.

Source of data: 2017 annual reports, corporate profile info on websites and LinkedIn profiles of all current CEOs, board chairpersons and non-executive directors of the 32 banks in Ghana.

FY 2019: Compliance Review on CG 44, 45 and 51

  • BARCLAYS: Current board chair, Mr. Charles Coffie, having served since 2011 is expected to be succeeded by a new chairperson in compliance with CG 51.
  • STANBIC: In 2019, the Managing Director of Stanbic Bank has joined league of longest serving CEOs who have been affected by CG 44. Currently in his twelfth year as MD, Mr Alhassan Andani may have to start contemplating succession arrangement for Stanbic bank. Mr. Kweku Awotwe has been succeeded by Ernest Aryeetey as Board Chair, complying with CG 51.
  • CALBANK: Mrs. Helen Nankani and Mr. Malcolmn Pryor have been slated for retirement “in accordance with section 298(a) of the Companies Act, 1963 (Act 179) and Regulation 78(b) of the Regulations of the company (CAL Bank).” It still remains uncertain whether Mr. Paarock Van Percy, having been appointed as acting board chairman in 2009 and substantive chairman in 2010, will continue to serve in that capacity after 2019, following CG 51. Same question applies to Mr. Frank Adu Jnr. in respect of CG 44.
  • PRUDENTIAL BANK: Mr. John Sackey Addo, having serve as Board Chairman since 2007, is affected by CG 51, and expected to vacate position in 2017. Mr. Sekyere Abankwa is also expected to comply with CG 44 after 23 years of service. Given the new structural arrangement that may accompany Ghana Amalgamated Trust Limited’s interest in the former, it is expected that same will blow a wind of change across the board room. It remains to be seen.
  • ENERGY BANK: Having secured approval from Bank of Ghana to merge with First Atlantic Bank, info on current board composition and structure is yet to become public. As at time of writing, FY 2018 Annual Report was not publicly available.
  • GN BANK: Dr. Nduom, being chairman of erstwhile GN Bank, has escaped the effect of CG 51, seeing that GN Bank is now GN Savings and Loans.
  • GUARANTY TRUST: In compliance with CG 51, Guaranty Trust Bank Ghana, has appointed Mr. Olusegun J.K. Agbaje (Vice Chairman of the GTBank Ghana Board and the Managing Director/Chief Executive Officer of GTBank Plc) as Acting Board Chairman, following the exit of Alhaji Yusif Ibrahim, the former board chairman.
  • ZENITH BANK: Dr. Mary Chinery-Hesse, having served as board chairperson since 2008 is expected to be succeeded by a new appointee in 2019, following CG 51.
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Would these CEOs exit in 2019?

With combined CEO experience of more than 44 years, Mr. Alhassan Andani, Frank Adu Jnr and Mr. Stephen Sekyere-Abankwa of Stanbic Bank, CAL Bank and Prudential Bank respectively, have built strong brands, led dynamic teams and generated competitive yields on shareholder capital. In my humble view, they all are meritorious of honors befitting industry legends, having contributed to the development of not just the money markets but the public equity markets as well. Whether or not CG 44 triggers an urgency for leadership succession at these banks depend on the interpretational view that the regulator takes of CG 44. Prudential Bank’s situation may be a little different given the potential changes that may come with new ownership arrangements accompanying Ghana Amalgamated Limited’s involvement. Whatever the outcome, the leadership question for these banks going forward will be central to their future growth. At Metis Decisions LLC, we see interesting times ahead for financial market operators as reforms begin to bear fruits.

About Author

He is a managing consultant with Metis Decisions LLC, and doubles as Head, Credit and Market Risk, YieldRock. Author’s Email:


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