Bank of Ghana stepping up regulatory and supervisory approval - Governor

Accra , Feb 08, GNA - The Bank of Ghana is taking steps to continually improve its regulatory and supervisory responsibilities to ensure that only strong and well-managed banks operate in the country, Central Bank Governor Kwesi Amissah-Arthur has said.

Speaking on "The Role of the Banking Sector in Developing the Ghanaian Capital Market," at the ongoing Euromoney Conference, Mr Amissah-Arthur said the re-capitalization policy provided a much-needed boost to the economy with the near quadrupling of bank capitalization from GH¢445.8 million to about GH¢1.65 billion in the three years between December 2008 and December 2011.

Banks’ reserves have also doubled from GH¢666.9 million to GH¢1.38 billion over the same period.

“The increased capitalization has enabled banks to take on large transactions vital to the economy,” he said, adding that the safety and soundness of the banking system hinged on adequate capital and good governance practices, including robust risk management systems.

Mr Amissah-Arthur said, the Central Bank was also encouraging banks to list in the local stock market because of the benefits to the wider economy.

“If the other twenty banks get listed on the Ghana Stock Exchange, the number of listed equities will increase to 56, thus add momentum to activities on the Exchange,” he said, adding that it was to tap those potential benefits that the Bank of Ghana was pushing for the listing of all banks on the stock market in the medium to long term.

To start with, he said, the Central Bank was offering the opportunity to domestically-controlled banks that had not as yet met the required minimum capitalization of GH¢60 million, to explore the stock market option for closing their capital gaps.

He called for the need for attitudinal change for Ghanaian business owners of a desire to share ownership so as to properly harness the capital markets.

“Entrepreneurs must look beyond their immediate situation and seek to tap into capital from the wider public. This calls for a desire to share management and to be subject to serious scrutiny. This understanding is vital to unlocking the potential of our capital markets,” Mr Amissah-Arthur added.

He said the governance structures imposed by the stock market, including a broadening of ownership, regular, periodic reporting to the market and independent Directors not only enhanced confidence in the institutions but complement the oversight role of the regulator.

“Banks that adopt this route have the opportunity to build enduring relationships with international banks and tap into medium to long term funds for intermediation in the local economy,” he said.

“Thus, in addition to opportunities for attracting additional capital resources and therefore building their capacities for risk taking, such banks stand to attract capital for greater intermediation,” Mr Amissah-Arthur added.