Governor of the Bank of Ghana, Dr Ernest Addison, has blamed the lack of good corporate governance for the collapse of UT and Capital bank.
The Central Bank revoked the licenses of UT and Capital bank to operate as commercial banks due to their excessive liabilities and failure to improve their balance sheet.
Speaking at a breakfast meeting at the Banking College, Dr. Addison said good corporate governance is not only essential to minimizing risk but it is also fundamental to improving economic performance.
He said, “Corporate governance plays an important role in promoting a sound financial system, contributing significantly to improving overall performance not only in profits but in credibility.”
Addressing the revocation of the licenses of UT and Capital Bank earlier in the year, he said “the revocation of banking licenses of UT and Capital bank due to significant capital deficiencies, also partly reflected poor corporate governance practices within these institutions.
Also speaking at the breakfast meeting Head of Banking Supervision at the Bank of Ghana, Raymond Amanfu warned banks in the country to desist from acquiring shares in companies that do not have pure financial obligations.
“I believe that we have to be very careful as bank managements. This concept of Holding Groups, the law makes it very clear that every bank that wants to go into any group holding, must be purely a financial holding and you are now going to report on consolidated basis.”
According to him, the phenomenon has led to banks diversifying their capital base which is unhealthy for the financial sector.