The former directors of the five banks which were closed down by the Central Bank on Wednesday may struggle taking up new jobs in the banking sector.

This is because the Bank of Ghana (BoG) is currently applying its Fit and Proper guidelines which could affect some of these officials as well as top management staff. 

The Central Bank announced the creation of the Consolidated Bank Ghana Limited after it took over five struggling banks in the country.

Sovereign Bank, Royal Bank, The Beige Bank, Construction Bank and Unibank are the five financial institutions that have run into liquidity challenges.

Government has made ¢450 million available for the new bank as starting capital and has named Daniel Addo as its CEO.

What is this directive?

The Directive is issued under the powers conferred on BoG by Sections 6 and 92 (1) of the Banks & Specialized Deposit Taking Institutions Act, 2016 (Act 930) which shall apply to regulated financial institutions licensed or registered under the Act 930 and any other entity regulated by the Bank of Ghana under any other enactment.

Objective

It’s a set out a framework which can be used by regulated financial institutions as well as the Central Bank in determining whether a person is fit to be a director, a significant shareholder or to hold a key management position within the organization.

What is “Fit and Proper”

It means a person who is suitable to hold the particular position which that person holds or is to hold as regards:

(a) the probity, competence and soundness of judgment of the person for purposes of fulfilling the responsibilities of that person;

(b) the diligence with which that person fulfils or is likely to fulfil those responsibilities;

(c) whether the interest of depositors or potential depositors of the entity are threatened, be likely to be, in any way threatened by the person holding that position;

Bank of Ghana and Enforcement

Speaking to JoyBusiness, the head of Banking Supervision at BoG, Osei Gyasi said even though it might be early days yet, when the names of these former directors, pop up again, the regulator would just apply the rules when it comes the Fit and Proper regulation. 

“One thing that my superiors keep saying is that we don’t want to recycle bad behaviours, we are humans, I agree but when it comes to some of these things we have to go strictly by the rules,” he said.

He added, “we cannot allow a situation where somebody sits on bank A, he or she misbehaves and then he is allowed to move to another bank. It is a privilege to be given a license to and to work as a director and you must ensure that you go by the rules” 

Possible Prosecution of Directors

The Bank of Ghana says it is willing to submit the names of some of the directors of the liquidated banks to the various security agencies for the necessary investigation and prosecution. 

This is based on the findings by the Bank of Ghana some of the shareholders of these banks took depositors funds out of the bank with the notice of the regulator as well.

There have been calls for the regulator to act on these developments, but the Central Bank has maintained that it is now left with the various security agencies to act on these findings.

Justification for license revocation

Some of the defunct banks have maintained they would have still been in operations if the Bank of Ghana had given them a little time.

They claim they were already working recapitalising their financial institutions.

According to some of them, the haste with which the regulator moved to close them down was politically motivated.

But Mr Gyasi refuted such claims saying the move has saved the entire banking industry.