The banking code of ethics and business conduct: …rebuilding the image of the noble profession (1)

ONCE UPON A TIME: the relevance of history in risk management (final)
Alberta Quarcoopome

Quote from Warren Buffet:

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently. You have to be wary in life as well as business. It’s a little scary to think about how easy it is to destroy your public image. Exercise extreme caution by weighing every action like a million-dollar decision, because it might be.”

On 28th November, 2020, the President of the Chartered Institute of Bankers, Ghana, Rev. Patricia Sappor, launched the Banking Code of Ethics and Business Conduct at the annual Bankers’ Dinner. According to her, proper adherence to the code will go a long way to consolidate the gains realized after the financial sector clean-up by the Bank of Ghana, and the subsequent confidence the public has reposed in the banking sector.

Unlike other code of ethics that CIB has previously developed, this one has more legal authority. The Ghana Banking Code of Ethics and Business Conduct was developed by the Chartered Institute of Bankers, Ghana, in collaboration with the Ghana Association of Bankers and the Bank of Ghana. The code is in line with the Chartered Institute of Bankers, Ghana Act 2019 (Act 991) which reinforces the CIB’s mandate of setting standards and ensuring the observance of ethical standards and ensuring the observance of ethical standards and professional conduct among members of the banking profession in the country.

Overview of the Financial System

The following points summarizes the functions of financial markets:

  • Financial markets provide for financial intermediation–financial savings (Surplus Units) to investment (Deficit Units)
  • Financial markets provide payments system eg: clearing cheques, funds transfers, international payments, etc.
  • Financial markets provide means to manage risk.

Banks, therefore, have a responsibility to ensure that they manage funds prudently, and engage in practices and behaviours that make them safe and sound, so that they are able to attract and retain the trust and confidence of the public. This is important for shareholders, directors, managers, employees and depositors.

Contemporary Banking Issues

The past three years has witnessed a repetition of bank crises in Ghana. Several financial institutions, that is, universal banks, savings and loans companies, microfinance companies, finance companies, fund management companies etc have had their licenses revoked by the Bank of Ghana and the Securities and Exchanges Commission. The main reasons have been:

  • Poor credit delivery and monitoring.
  • High Non-Performing loans
  • Erosion of capital, illiquidity & insolvency
  • Mismanagement
  • Mix-match of funds.
  • Bad corporate governance
  • Unethical related party transactions (eg. No/minimum credit analysis of exposures to them, breach of single obligor limit.
  • Frauds and losses by staff and clients/customers.

The effect of the banking crises are there for all to see: Inability to honour customers’ demands, Panic withdrawals, Withdrawal of banking licenses, Takeover by Receivers, Loss of trust & confidence in locally-owned FIs and shift to foreign-owned banks, Reduction in deposits in the remaining local banks & concentration in mobile money transactions, Diversion of funds by borrowers and non-repayment of loans granted.

All hands on deck

Even though most customers’ funds have been refunded, the element of doubt about the safety of their deposits continue to haunt them. Let us look at the issues, not through the blame game that we are all guilty of, but through a self-audit approach as we all play our part to become more ethical in our banking business. It is all hands-on-deck. Just as all parts of the human body make up a whole, everybody has a part to play in making banks successful.

The Self-Audit: Questions to Ponder

I will start with some pertinent questions that we should all ask ourselves. Please don’t take them personal.

Mr. Security Guard: How alert are you on the job? Are you mostly on your phone chatting away divulging bank and customer transactions unknowingly to the public, giving indirect information and access to fraudsters? Do you turn a blind eye when some properties are being moved out of the premises without documents?

Madam Teller: Are you working with integrity? Do you suppress customers’ credit and divert to other accounts and repay only when you have made a cut or do you grant ‘soft loans’ to your friends? One day for the master. Do you short-pay customers or insert lower denomination into the packets? Please stop because these small beginnings become big losses to the bank eventually.

Mr. Front-liner: Do you ensure proper KYC as you process account opening documentation? Do you cut corners and allow free entry into the banking system? Do you turn a blind eye to fake documents without alerting your supervisors? Don’t you now that free entry without visas and permits provide free access to both local and international fraudsters?

Miss Loan Officer: How conversant are you in credit analysis? Do you forward loan applications which are faulty and not feasible? Do you pretend you have visited customers’ business premises and houses and forge stock positions while manipulating customers’ cash flows and budgets? How strong-willed are you in avoiding bribes?

Mr. Human Resource Director: Do you recruit people with the required skills and competencies or only from friends, families and loved ones? You cannot punish them when they deviate. How fair is your reward and sanctions policy? Are you leading by example or by divide and rule tactics?

Mr. Auditor: Are you assertive enough to make proactive recommendations for the bank’s processes and policies? Do you just audit to catch a thief or is it the risk-based approach to get to the root causes of events? Please don’t smoothen the rough edges and create an impression that all is well because it is not.

Mrs. Finance: Do you watch the figures close enough to identify any income leakages and expenditure over-runs. Please don’t be tempted to manipulate figures for Management as well as the Regulator. Are your general ledger accounts properly reconciled or you have many accounts in suspense for long periods. How are you treating your “toxic assets” and off- balance sheet items. Are they being disclosed to your Management and Board? Please investigate.

Mr. Technology: how robust is your IT system? Was it purchased out of duress? You know Ghana has many allegations  of cases involving purchases of computer software which are not appropriate. I hope it is scalable and can be integrated with other systems easily with minimum cost. Is your system strong enough to withstand hackers and denial of service attacks? Are your users able to access many applications easily? I hope not.

Ms. Sales and Marketing: Do you accept any Tom, Dick and Harry into your bank just to meet the targets given to you? Do you follow up on your customers to confirm the information given to you during the account opening process? Do you understand the products you are selling? Are you selling a product or a relationship? Please know your customers well so that they will stand by you even when you face problems.

Mr. Legal: The bank relies on you for protection and as a counsel in cases of legal suites. Are you abreast with the new banking laws. How fast and efficient are you in following up legal documentation on securities? I hope you scrutinize all the guarantees and documents and ensure the bank’s interest is paramount. How well do you understand the banking procedures which should feed your decision-making?

The Banking Executives: Are you upgrading your knowledge? How do you assess your bank with your peers in the industry?  How well do you appreciate the numerous reports sent to you? Do you investigate and call for details of strange items in the report? How well do you appreciate the workings of the Assets and Liabilities Committee?  How symmetrical is the information that you have, with the ones that you prepare for the Board. Do you have policies and procedures covering all departments of the bank? How strong are you in withstanding the political and economic influences and shocks around you? What is your leadership style? How transparent is your leadership? Do you have a listening ear? Remember when disaster strikes, it is your assets that will be frozen.

Board of Directors: How well-informed are you about the state of affairs in the bank? Do you ask the relevant questions when reports are sent to you? Do you critically understand the exposures being made to customers, in relation to the capital position of the bank? Do you know the top five risks in the bank? Do you make the Executives accountable for their actions? What is your relationship with the Chief Executive like?

Customers: what are your intentions for banking? Is it for easy payment systems for your business, for loans to expand it, for business advice, for a personal relationship with that beautiful lady or handsome bachelor? What are your intentions for your loan proposal? To divert funds to repay your other loan in the other bank or to buy that posh apartment to show off to your friends and chicks? Are you repaying your loans? Are you using your political influence in the bank to obtain more funds for your political agenda? Are you using the bank to channel the proceeds of your ill-gotten wealth into the country? Do you know your rights and responsibilities as customers?



Alberta Quarcoopome is a Fellow of the Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She is the Author of two books: “The 21st Century Bank Teller: A Strategic Partner” and “My Front Desk Experience: A Young Banker’s Story”. She uses her experience and practical case studies, training young bankers in operational risk management, sales, customer service, banking operations and fraud.



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