Banks closure: CIB calls for regulatory compliance, strong ethical culture

The Chartered Institute of Bankers, Ghana (CIB) has reiterated the need for all stakeholders in the banking sector to uphold the ‘critical imperatives’ for achieving banking success. 

It said the banks particularly need to uphold regulatory compliance, proactive risk management and strong ethical culture.

According to CIB, the recent collapse of the five banks and their subsequent consolidation into one bank -- Consolidated Bank Ghana Limited -- is an unfortunate one. 

“However, we are confident the Industry will soon recover and the dividends will pay off as the various regulations will primarily help protect depositors’ funds and ultimately help banks support the economic development of Ghana.”

According to the CIB, the Bank of Ghana as the regulator has the responsibility of ensuring sanity in the banking environment in order to increase customer confidence in the banking industry and investor confidence in Ghana as a whole.

The Institute believes that banks need the right combination of formidable business models and regulatory compliance to survive.

Below is the full statement:

STATEMENT ON THE CURRENT HAPPENINGS IN THE BANKING INDUSTRY BY THE CHARTERED INSTITUTE OF BANKERS, GHANA

The Chartered Institute of Bankers, Ghana has noted with utmost concern, the recent developments in the Banking Industry; the revocation of the licenses of five Banks, increasing the number of defunct banks to seven within a period of one year. 

The Institute after interrogating and understanding all the issues surrounding these developments considers the actions by the Central Bank necessary and critical to the growth and development of the financial sector.   

The Bank of Ghana, as the Regulator has a responsibility of ensuring sanity in the banking environment in order to increase customer confidence in the sector and investor confidence in Ghana as a whole.

We believe the steps being taken by the Governor and the Bank of Ghana to sanitize the banking sector are appropriate and commendable and the Institute is confident these reforms would place the Ghanaian financial sector on the right pedestal to be more responsive to the needs of the economy and create a resilient banking environment.

The main causes of the collapse of the five banks as the Central Bank has enumerated include among others poor corporate governance practices, liquidity challenges and poor lending practices leading to non-performing loans. The Central Bank has introduced new regulations such as Bank recapitalisation, Corporate Governance directives (section 56 of the Bank and Specialised Deposit-Taking Institutions Act 2016, Act 930), IFRS 9 and Basel II implementation by Banks which are all meant to purge the Banking Industry and make the sector more poised to take on its role as a catalyst to the Country’s economic growth and development.

It is the candid view of the Chartered Institute of Bankers, Ghana that Banks need the right combination of formidable business models and regulatory compliance to survive. Responding to the progressively more sophisticated and competitive banking sector requires the crafting of new strategies capable of positioning banks on a path of sustainable growth.

The Chartered Institute of Bankers, Ghana would like to underscore the need for all stakeholders particularly Banks to uphold the ‘critical imperatives’ for achieving banking success which include regulatory compliance, proactive risk management and strong ethical culture.

The collapse of the five (5) banks and their subsequent consolidation into one bank (Consolidated Bank Ghana Limited) is an unfortunate one.

However, we are confident the Industry will soon recover and the dividends will pay off as the various regulations will primarily help protect depositors’ funds and ultimately help banks support the economic development of Ghana.

The Chartered Institute of Bankers will collaborate with the Ghana Association of bankers to initiate capacity building workshops for bank staff to continue to upgrade their skills and competencies to enable them to perform on the job.

We wish to assure all stakeholders of the Institute’s commitment to hold its members to the Code of Conduct and Ethics of our profession.  Furthermore, any member found culpable by the Bank of Ghana in the investigations into the failed Banks would be subjected to the disciplinary procedures of the Institute.