Bank Of Ghana’s intervention saved 5,000 jobs – Dr Addison

The Governor of the Bank of Ghana (BoG), Dr. Ernest Addison says the decisions his outfit took as a regulator protected the deposits of more than 1.5 million customers valued at over GH¢10 billion.

He also said the orderly intervention and revocation of the licences of under-performing banks, as well as the purchase and assumption transactions, ensured that about 70 percent of the 5,000 jobs in the affected banks were saved.

He stressed the need for more regulatory and supervisory vigilance to properly safeguard the new banking system after the reforms.

Speaking recently at the annual dinner of the Chartered Institute of Bankers (Ghana) in Accra, Dr Ernest Addison, disclosed that the level of related-party transactions that became so endemic in the banks that were resolved has informed BoG’s decision to operationalize the directive on financial holding companies next year which seeks to facilitate effective consolidated supervision of regulated financial institutions and ensure that holding companies and affiliates of banks and SDIs do not take advantage of banks to the detriment of depositors and other creditors.

He added that the government had indicated that it would set up a high-level financial stability council with a key objective of bringing together all financial sector regulatory bodies and the Ministry of Finance to work together to minimize, if not eliminate, regulatory arbitrage and other sector-wide risks.”

The Governor hinted that the industry’s effort at reducing the high levels of non-performing loans was gradually taking shape partly due to compliance with the loan write-off directive.

“We expect further improvements in asset quality with the appropriate disclosures of loan write-offs in banks’ year-end published financial statements.

“The draft Credit Reporting Regulations and the draft Borrowers and Lenders Bill are in their final stages. When completed and passed by Parliament, these pieces of legislation should help improve the credit underwriting process and facilitate enforcement of loan and collateral agreements by banks and other regulated institutions.”

“Currently, the quarterly financial publications of banks are reported in line with IFRS 9, using the expected credit loss standard. This is improving on credit risk management frameworks and enabling banks effectively measure risks embedded in their credit portfolio. The full impact and benefits of this new standard in our credit administration process is expected to materialise in the coming year.”

Touching on the preparations by commercial banks to meet the capital requirement of the BoG by the December 31, 2018 deadline, he said about 22 banks had either met or were in good standing to achieve full compliance with the new minimum capital requirement.

Noting that banks now have more assets with capital adequacy ratios well above required regulatory levels, he said it was not surprising that the improving banking sector stability partly accounted for Standard and Poor’s recent upgrade of Ghana’s long-term rating to ‘B’ from ‘B-’ with stable outlook.