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BoG To Stop Waiving Single Obligor Limit For Banks
   News: Banking News

Mr Kwesi Amissah-Arthur, Governor of Bank of Ghana, on Friday said granting of waivers of single obligor limit to banks to enable the importation of crude oil and petroleum products could not be continued.

He said the central bank grant those waivers reluctantly in the past because it amounted to abandoning the prudential norms that had been introduced to minimized risks to banks.
“This practice cannot be continued. It should be possible for our banks to grow to enable them finance large transactions or in the event, to use syndication as a tool for handling occasional extraordinarily lumpy transactions,” he added.
Mr Amissah-Arthur said this at the launch of the Ghana Association of Bankers’ (GAB) Conduct of Business Standards (GABCOBS) in Accra. The occasion coincided with the Annual General Meeting of GAB.
The 21-paged business code was voluntary standards of good practice for members of the Association to follow when dealing with member banks in Ghana.
It also provides basic guidelines of business practice, and professional and personal conducts that are expected to be adopted and upheld by members.
Mr Amissah-Arthur said the code sought to cure a number of potential ills and other anti-competitive practices, including discrimination among banks, abuse of dominance, unfair luring of customers and interference in the business of other banks.
He noted that entrenching ethical business practices was good for the long-term sustainability of sector and commended the Association for the effort.
“It is important to recognise that the value of the code lies in compliance with its prescriptions. The Association must therefore invest in educating staff, management and boards of banks on policies and actions that can breach the code.
“The Association must also invest time in monitoring compliance as well as create avenues for redress where there are breaches,” he said.
The Governor said with the passage of the Banking Act 2004, Ghana moved to a universal banking system with higher and uniform minimum capital requirement for all banks, leading to the elimination of compartmentalized system of banking, comprising commercial, development and merchant banks.
He said in 2008, the Bank of Ghana through a consultative process revised minimum capital requirement for all banks with a phased implementation for foreign and domestically controlled banks between 2009 and 2012.
“The first phase was successfully completed in December, 2009 as all eligible foreign-controlled banks re-capitalized to GH¢60 million. The second phase, which requires the domestically-controlled banks and two foreign licensed in 2008 to re-capitalize to GH¢25 million was also completed at the end of 2010.
“The final phase of capitalization is expected to be concluded by December 2012 with all banks attaining the GH¢60 million minimum capitalization,” he said.
Mr Amissah-Arthur noted that nobody could fault the Bank of Ghana for acting on the recapitalization of banks at that time because the re-capitalized banks were better position to finance large transactions at the expense of the domestic banks; further augmenting their competitive advantage.
On credibility, the Governor said it was regrettable that due to shortage of qualified bankers in the economy, a number of staff dismissed for unethical or fraudulent behaviour from some banks have found their way back into the banking system and continued to engage in malfeasance.
He therefore asked that due diligence be carried out on prospective staff to ensure that the personnel met the fit and proper test and reiterated the Central Bank’s commitment to collaborate with the banks to create a database of staff that could be consulted before decisions on appointments were made.
He said in response to the global financial crisis, the Bank of Ghana had established a Financial Stability Department to assess the macro-prudential risks facing the economy and to make suggestions for dealing with them.
“One of the key output of the Financial Stability Department would be the publication of a Financial Stability Review, which will attempt to draw lessons from the systemic risks on our banking and financial system. We intend to share the support with you our stakeholders. It is our hope that all of us would co-orporate in our pursuit for information for analysis and discussion of the outcome,” he said.
Mr Asare Akuffo, President of GAB, said the growth experienced by the industry over the past five-year period had been phenomenal.  
He said the industry had grown from 22 banks in 2006 to 27 banks now while the numbers of bank branches had increased from 397 to 703 and total assets had grown by over 130 per cent to GH¢17.4 billion in 2010.
He said in 2003 the Association outdoored a Code, which set standards of good practice in the dealings and relations with personal customers while this new Code sought to rationalize dealings among member banks.
Mr Asare expressed the hope that members would use the code to improve upon the standards they might have set for their respective banks and employees.




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