Bank of Ghana is insisting that the banking sector is safe and sound despite the recent challenges that have hit the sector.
This assurance was captured in a new document issued by the regulator on measures being taken to restore industry confidence.
Details and background of the industry challenge
The document released by the Bank of Ghana outlines measures being instituted to restore confidence and build a resilient Banking system in the country.
The report noted that the challenges in the sector date back to 2015.
This was after the Bank unearthed a number of weaknesses that have existed in the banking sector over the past two years.
This has resulted in solvency challenges, poor corporate governance practices and regulatory breaches. The report indicated that the development resulted in some banks been put on liquidity support.
It is however not clear for now whether these banks are still on a support a development that said not to be good for the finances of the Bank of Ghana. A recent report released by Central Bank showed that it has spent over GHc5 billion as at the end of last year supporting commercial banks.
Fresh measures to deal with industry challenges
The Bank of Ghana noted that some of the measures it has instituted include, operationalize, the deposits protection scheme, issue and strictly enforce its fit and proper person, for bank shareholders, directors and key management personnel, to promote high industry standards.
The Bank is also looking at improving collaboration with other regulatory bodies to help reduce gaps in the regulatory framework for banking groups.
On the minimum capital requirement, the regulator noted that it is closely monitoring banks’ plans to recapitalize to ensure an orderly recapitalization process, whiles insisting that the review in the capital is needed to deal with some industry challenges.
It also indicated that capacity of the banking supervision department is being strengthened to ensure strong enforcement of prudential and conduct regulatory requirements.
The regulator said it would continue to roll-out the Basel II/III supervisory framework, and ensure implementation of IFRS 9 by banks.
It concluded that “it will continue to monitor developments in the banking sector, and where needed, take strong and decisive action at an early juncture to address emerging issues.”
BoG says it will ensure that depositors’ funds remain safe and that the financial system remains stable and resilient, contributing significantly to the overall growth and development of the economy.