STANDARD CHARTERED BANK
OFFICIAL OPENNING OF NEW HEADQUARTERS BUILDING
ADDRESS BY DR. ERNEST ADDISON, GOVERNOR, BANK OF GHANA
ACCRA, OCTOBER 3, 2018
Your Excellency the President of the Republic: Nana Addo Dankwa Akufo-
Addo,
Honorable Ministers,
The Board Chairman and Directors of Standard Chartered Bank Limited,
Distinguished Executives of the Banking Industry,
Invited Guests,
Ladies and Gentlemen,
1. It gives me great pleasure to be here today for the official launching
of this new ultra-modern head office for Standard Chartered Bank (Ghana)
Limited, and for the opportunity to make a few remarks on this occasion.
2. Standard Chartered bank has been a very successful Bank with a
great tradition as a financial institution. Established as the Bank for British
West Africa (BBWA) during the colonial era, it predates all existing banks
including the Bank of Ghana itself. The Bank's slogan "Here for Good"
provides a deep historical perspective to banking in Ghana and indeed in
the entire West African sub region. The Bank has also been managed
largely by a Ghanaian workforce and it is a Ghanaian Bank by every
standard.
3, Mr. Chairman, the overall contribution of Standard chartered to the
banking industry in Ghana is not in doubt. Its history is intertwined with the
socio-economic development of Ghana. It remains one of the top tier banks
in terms of total assets and deposits of the industry. The Bank has also
contributed churning out of astute professional bankers who have moved
on to serve other institutions in the industry. It has also supported lending
to various sectors of the economy such as mining, utilities, construction,
agriculture, manufacturing, and services. More recently, the bank has gone
through some transformation based on its business model re-engineering
to reposition itself as a major player in the industry.
4. Mr. Chairman, financial services remain crucial in promoting
economic growth and reducing poverty. It is in this regard that the Bank of
Ghana has established as a major policy priority, the development of a
sound financial system with strong individual component institutions. The
idea is to position the sector as a major growth driver, to support an
inclusive broad based economy with the full implementation of new higher
minimum capital requirements by the end of this year. We know that banks
are working strenuously to meet this requirement and we may end the year
with many more banks meeting the minimum capital requirement than was
originally anticipated. This will help ensure a banking industry that is well
capitalized and well-positioned to support the much needed economic
transformation Ghana needs.
5. We have been working with the fiscal authorities and other
stakeholders to create the enabling environment to support growth and I
am happy to report that we are beginning to see good results. At the last
Monetary Policy Committee meeting, we observed that economic activity
continued to strengthen with robust export growth, higher industrial
electricity consumption and higher tourist arrivals. Overall, the country
remains on a steady growth path with the first quarter 2018 GDP outturn
estimated at 6.8 percent, compared with 6.7 percent in the same period of
2017. Also, the Bank's updated Composite Index of Economic Activity
(CIEA) showed a strong pickup in the year to July. Ghana recorded a trade
surplus of $1.4 billion at the end of August. Headline inflation broadly
declined and has ranged between 9.6 and 9.9 percent over the past five
months, despite the marginal upticks occasioned by adjustments in
administered prices.
The Cedi's strong performance against the major international
6.
currencies in the first quarter of 2018 weakened in the subsequent quarters
as the currency came under pressure, mainly from emerging and frontier
market contagion effects. Factors such as the US Fed rate increases due to
continued monetary policy normalization, strengthening of the US dollar,
rise in US yield rates, and the escalating trade tensions have all taken a toll
on emerging market and frontier economy assets.
7. The combination of these factors have resulted in a tight financing
conditions, reverse capital flows and exchange rate pressures in most
emerging market and frontier economies, including Ghana. However,
different countries have responded differently depending on the strength of
their underlying macroeconomic fundamentals. The impact on the exchange
rate in Ghana has been somewhat moderated compared to other EMs and
frontier economies-a testament to the gains in macroeconomic stability
achieved over the past 18 months. While currencies in other EMs are still
under stress, Ghana's currency has recently regained some stability and the
local currency is gradually becoming more stable. Indeed Ghana has
recently received an upgrade by Standard and Poor's to her sovereign
credit rating on the back of improved monetary policy effectiveness and
improved banking sector stability.
8. Our banking system is becoming stronger with capital adequacy ratio
reported at 19.1 per cent at the end of August, significantly above prudential
requirement of 10 percent. Non-performing loans of the industry continue to
decline and we expect a major reduction as banks begin to implement write
off policies, in line with approvals received from Bank of Ghana to address
the legacy loans that have been fully provisioned for. We have also
observed a return to efficiency in the industry as operating expenses across
banks are beginning to reduce, which should ultimately result in declining
interest rates. With the increased capitalization of banks, declining levels of
non- performing loans, and better credit risk assessment in the banking
system, we should expect the pricing of credit to reflect these trends.
Interest rates and spreads that have been slow to adjust should move in line
with inflation.
9. These are the conditions which would lead to improved access to
credit for small and medium enterprises to financial services. They
constitute the largest population where the benefits of access to credit
touch directly on the fabric of the society and income security, and the
ultimate good of raising living standards.
10. As the Bank of Ghana continues to strengthen the regulatory and
supervisory frameworks to restore confidence and promote stability and
integrity of the banking sector, it is important that we do not overlook cyber
security measures to combat financial crime. As part of the National Cyber
Security Awareness Month (NCSA) in October, which was launched two
days ago, the Bank of Ghana will inaugurate its Security Operations Centre
(SOC) on the 22nd October and also launch the cyber and information
security directive for the industry. Subsequent to the issuance of the
directive, banks would be required to follow an implementation schedule to
ensure that effective cyber security controls are in place to counter any
form of cybercrime.
Through the Bank's monitoring systems we have observed the daily
11.
attempts by cyber criminals to bypass security controls and exploit
vulnerabilities within the cyber and information security defenses of
financial systems. To counter these, we are strengthening and increasing
the scope of Anti-Money Laundering risk-based supervision and collaborate
with the Financial Intelligent Centre (FIC), Economic and Organized Crime
Office (EOCO) and other law enforcement agencies to reduce the
incidence of cyber-attacks on the financial sector.
12. Mr Chairman, the common good is a healthy financial system
founded on strong individual banks and financial institutions. To achieve
this common good, the Bank of Ghana is strengthening its risk-based
supervision framework and will continue to count on the cooperation of
banks. This transition puts more emphasis on capital efficiency. As banks
accumulate more capital they have to find the most efficient use of this
capital to support its business mix. This calls for the fluid use of resources
to capture the appropriate return on equity. The challenge will call for a
diverse repertoire of competencies, the diagnostic ability to be innovative or
what things should be unlearned, and the behavioural flexibility to be able
to change.
13. Mr. Chairman, there are a number of factors that explain the success
of Standard Chartered Bank in the market: the provision of better quality
products and services, competitive pricing and enhanced access by
customers on terms structured to meet their needs, and a culture rooted in
uncompromising respect for the highest standards and integrity that are
essential for public confidence. And they are doing so, we believe, in an
atmosphere of fair competition and in a stable, predictable and liberal
regulatory framework. We urge other banks as well as the locally owned
Ghanaian Banks to emulate these strong standards, especially the
strengths of its corporate governance.
14. As I have highlighted earlier, the financial sector in Ghana is solid,
well-capitalized, and healthy. And, over the last year, we have seen further
improvements as the reforms begin to take shape.
15. However, we have a few institutions in the sector that have come under
stress in both banks and specialized deposit taking institutions. What are
common among these institutions are unsustainable business models and
poor corporate governance practices which has led to the misapplication of
depositors funds and pushed them to the threshold of insolvency with
liquidity shortages. And, we have all been witnesses to how customers of
these institutions have reacted. These developments are not a reflection of
the industry. We have very strong banks and Savings and Loans that are
doing well. However, we are working with the Ministry of Finance on a
recovery plan which we expect to be implemented soon.
16. We urge Stanchart to continue to draw on its strengths, knowledge of
the local market, professionalism and, above all, a customer-focused
culture to develop products and services to meet the banking needs of the
public. Whilst they may target the blue-chip companies in the system for
good reasons, there is a clear need to also give the small business
enterprise sector a focus and to provide services to meet the needs of this
relatively neglected sector of the banking market.
17. On this note, Mr. Chairman, let me once again congratulate the Board,
Management and Staff of Standard Chartered Bank on the opening of this
new Headquarters building.
Thank you all for the attention.