The designs of modern banking halls have beautiful scenery and the environment is serene and inviting. Customers sit in comfort and wait to be served by the tellers. The tellers look elegant and cheerful. Indeed, the banking halls are a delight to observe. Here come the camels! Camels are mammals with long legs, a big-lipped snout, and a humped back. In addition to their humps, camels have other ways to adapt to their environments.
Though many people think that camels only live in hot climates, they can do well in air-conditioned environments. They are very social and like to greet each other by blowing in each other’s faces. As to why they have found their ways into the banking halls and are enjoying special attention requires understanding. Are they in to add to the glamour? If you have not yet witnessed the movements of any of the camels at your bank, I would like to share my experiences with you from a bank nearby.
Before I submit the issues on the camels, I would like us to keep focus on the fact we currently have twenty-three (23) banks in the country after the recapitalisation exercise. Even though this round of recapitalisation is not the first in the industry, it was the most topical due to the amount involved – GH¢400million from the previous GH¢120million. The discussion was also intense due to the fact that some banks had their licences withdrawn on the grounds of impaired or suspicious capital. Since Capital Adequacy is one of the fundamental bedrocks of banking and stipulated by legislation, it will continue to define banking business in the country.
That is just by the way, let us now make a U-turn and focus our keen attention on the issue of camels in our banking halls. As to the intrinsic motivation for banks to have the camels with them, I decided to talk to some of my good friends in the corporate affairs and communication wings of our banks. As part of my expedition, I went to one of the banks which I was told has visible signs and notices of the camels in its premises.
The head of corporate affairs had travelled, but I was fortunate to meet an old friend who had closed from an Assets and Liability Committee (ALCO) meeting and was going for lunch. I raised the issue of the camels; nonetheless, he was preoccupied with the bank’s asset quality matters so much – to the extent that I was heavily absorbed in the conversation. Since the banking industry’s discussions have always been on asset quality (loan portfolio), I decided to take note of the issues while not forgetting the main purpose of my visit – to see the camels.
The figures in the financials
Indeed, during the course of conversation with my friend, he reiterated the fact that asset quality has been one of the most critical areas in determining the overall condition of banks. The quality of loan portfolio and the credit administration process influence the total asset quality; that is why I was not surprised at my friend’s mood after he had left the ALCO meeting. “Kojo! Don’t forget to help me see the camels,” I reminded him.
I turned my back and saw their managing director walking past. I was able to recognise him due to having watched him on TV, delivering a speech during the inauguration of their new head office. A sneak preview of the bank management’s profiles revealed that the MD leads a team of eight (8) other directors with a blend and spread of skills in the banking business; and they have the responsibility for day to day management of the bank. The team, as we know, is to ensure safe operations of the bank, and required to comply with the necessary internal and external regulations.
OH! Time was far spent, and l was unable to see the live camels, even though some customers acknowledged their live encounters with some camels in the banking halls. A young female vet had just arrived to attend the camels. Since I had other pressing activities on my schedule, l decided to leave and come back some other day to satisfy my curiosity. I left the bank with a tabloid my friend had given me that contained the bank’s first-quarter financial results.
Late in the evening at home, I started reading through the figures and had realised that the bank posted impressive first-quarter results after passing the recapitalisation test. Having looked at the financials, I realised that prospects for the banking sector look bright after the reforms. Managers and shareholders expect sustainable earnings at the end of every business year. The clock hit 11:00 pm and my eyes were heavy. I began to doze off and nearly invited a bull to a fight. I took my sleeping tablet in Psalm 4:8 capsules with the inscription “in peace I will lie down and sleep, for you alone, LORD, make me dwell in safety”. I prayed to see the light of the following today.
The Prospective Customer
Watching the camels was still on my mind. I entered the head office branch of my account-holding bank the following day to do a few transactions and then watch the live camels. I witnessed the live streaming of an incident in the banking hall. A bearded gentleman entered the hall with 2 sacks (Ghana-must-go-bags) loaded with money in GH¢50 denomination and wanted to open a current account. I giggled and told myself that KYC (Know Your Customer) and anti-money laundering (AML) checks would be on the minds of the officers, because not all that glitters is gold.
Deposit mobilisation drives are high on the agenda of banks after the recapitalization, and my bank cannot afford to lose prospective customers. Certainly, cash is king. It spurs business activity – which is why as bankers we intensify our efforts to mobilise more cash to improve the liquidity base of our banks, but regulatory compliance needs to be strictly observed. Though more cash also mean availability of funds for lending, there is always a need to be sensitive of concentrated risks and diversify our credit portfolio.
I have just seen a notice with some directives from the Bank of Ghana on the issue of the camels and how banks should protect them from harming customers. Alas! One of the camels sneaked its head out from an adjoining room to the branch manager’s office. I moved and jumped onto its back in excitement. Oh my God! I have had a fair share of customer experience! It was a delightful experience! My curiosity had finally been satisfied! Interestingly, through my expedition I have been able to refresh my mind on capital adequacy, asset quality, management, earnings, liquidity, and sensitivity. I hope you have also done the same.
These elements as defined in the Banks and Specialised Deposit-Taking Institutions Act, 2016 (ACT 930), in fact constitute the demi-gods of camels in the banking halls. These CAMELS (capital adequacy, asset quality, management, earnings, liquidity, and sensitivity), by international standards, are used as the template for legislating banking business. Indeed, camels do not live in the zoos alone, they also live in the banking halls. The real test of survival and strength of the whole banking system rests on the backs of camels. Any form of bruises, impairments or pain inflicted on the memory of these camels by bank managers will lead to banks’ collapse if the wounds are not treated with a deep sense of urgency.
This script was written by a Chartered Banker with a flair for feature writing. Apart from his work schedules, he edits or proof-reads corporate material for his colleagues, executive managers – including distinguished professionals working in various fields outside Banking. Through this column, his articles feature on third-party online media platforms in Ghana and outside. Email: [email protected]