Corporate governance expert, Marian Barnoh, has said the board members of the five banks that have been consolidated failed to deliver on their mandate.

Mrs Barnor, the former Chair of Merchant Bank, said the failure of the boards to ensure that proper checks are place resulted in operational challenges and breach of regulations that forced the Bank of Ghana to act to safeguard depositors’ money.

“The board’s duty is to ensure that there are checks and balances; the board’s duty is to ensure that there are risk management frameworks in place; the board’s duty is to ensure that credit management is in place; the board’s duty is to ensure that sanctions are in place,” she said Thursday evening.

Related: BoG creates Consolidated Bank to take over 5 struggling banks

Her comments on current affairs show, Good Evening Ghana, was in reaction to the central bank's revelations that it was forced to take the drastic step due to merge the five banks into one due to challenges such as non-performing loans and capital deficits that exceeded by many folds the regulatory minimum.

"If loans have gone bad, the question is what happened to risk management? …What happened to accountability? Because that is the role of the board: to make sure that they receive the necessary report especially through the audit committee and the risk management committee," she stressed.

Consolidation

The Bank of Ghana shook the banking space on Wednesday when it announced the creation of Consolidated Bank Gh. Ltd to take over the struggling indigenous banks.

The banks, Sovereign Bank, Royal Bank, Beige Capital, Construction Bank and Unibank, according to the regulator, have run into liquidity challenges hence the decision.

 According to the BoG, the Consolidated Bank Ghana Limited has assumed selected assets and liabilities of the five banks with immediate effect.

Government has made 450 million cedis available for the Consolidated Bank as starting capital and has named Daniel Addo as its CEO.

Sovereign Bank, BEIGE Bank and The Construction Bank obtained their license under false pretence, an act that could attract criminal charges.

At UniBank, an Asset Quality Review (APR) of the bank revealed that unscrupulous activities of shareholders, related and connected parties contributed to the bank’s woes.

Photo: Five Managing Directors of the dissolved banks: L-R: Stephen Kpordzih (Construction Bank) Osei Asafo - Adjei (Royal Bank) Dr Duffuor II (uniBank), Johan Rheeder (Sovereign Bank) , Mike Nyinaku (Beige Bank)

According to the Governor of the Bank of Ghana, Dr Ernest Addison, these persons had taken out a total of GH¢5.3 billion from the bank without recourse to due process. Commenting on this revelation, Mrs Barnor said sanctions must be applied.

'If there is a breach of the law, there should punishment to serve as a deterrent," she said.

She has admonished other banks to take a cue from the recent events.

"What has happened is a wake-up call. The Bank of Ghana has taken a serious action and I want to believe that this is not the end. They will look at themselves, they will look at banking supervision…and directors must take responsibility for what happens," she said.