The central bank must assert its authority and stringently enforce its regulations if the country is to have stronger financial institutions for sustained economic growth, a number of bankers have told the B&FT.

As long as recalcitrant banks and other financial institutions get away with breaches, the industry will continue to face avoidable weaknesses, the bankers said.

“The problem is not with regulation; it is with its enforcement; and so, the Central Bank, with the level of independence it has, must assert itself and get banks to do what they have to do,” Asare Akufo, Board Chairman of the newly established Construction Bank, said.

Supervision and regulation, he said, should be stronger so that sanctions are strongly applied on banks that are not meeting regulatory guidelines, in order to inject discipline into the system.

“Nobody should be allowed to infringe on rules and regulations and get away with it. If the economy continues to improve, you will see banks respond accordingly,” he said.


Stronger corporate governance regime

Lekan Sanusi, Managing Director of GT Bank, also called for “a very strong regulatory environment” that focuses more on corporate governance to ensure that when rules are set, they are stanchly adhered to.

“We are not lacking in any of these; we just have to improve upon them. Corporate governance is available and I understand there is a corporate governance draft in the works. It needs to be released,” he said.

He also called for a regulatory framework that will ensure efficient operations by the banks so they can post appropriate and decent returns to shareholders and quick resolution of Non Performing Loans (NPLs) such that banks, when they lend, can easily recover them.

Charlotte Baidoo, Managing Director of Women’s World Banking Ghana (WWBG), also urged the Central Bank to step in aggressively and force banks and other financial institutions to respect corporate governance rules.

“I think corporate governance is not being respected in Ghana. We have the Institute of Directors and I do not know what they are doing. In some jurisdictions, corporate governance works but you only see Bank of Ghana come around once a year to see your books and what you are doing.

There are situations where family members of the CEO are board members and emotions are sometimes used to hire workers, whereas what you should be looking at is the qualities the person brings to the table,” she said.

Charlotte Baidoo called for independent minded and qualified individuals on boards of financial institutions, so that the agenda for stronger banks will translate into a stronger economy.

The central bank has said it will, later this year, introduce a corporate governance guideline, to among other things, ensure financial soundness in the banking industry and improve economic efficiency and growth.

The BoG issued a Corporate Governance Exposure Draft in 2014 to elicit comments and contributions from the industry, including a review by the International Finance Corporate (IFC), the profit-making arm of the World Bank.

The new guidelines will see the capping of the tenure of CEOs at a maximum of three 5-year terms. The tenure of non-Executive Directors is also expected to be capped at two three-year terms.

Under the new guidelines, the positions of Managing Director and Board Chair cannot be occupied concurrently in the case of foreign banks.

Additionally, the size of bank boards shall be limited, as well as the retiring age for directors prescribed. Banks will also be required to disclose attendance at board meetings by directors in annual accounts.