ghananlpcommunity/ghana-gov-speeches-sentences huggingface dataset:
Beige B ank and Royal Bank were assessed to be insolvent , while Sovereign Bank and Construction Bank had been found to have obtained their licenses by false pretences and did not have the required capital to have been issued a bank license.
On the strength of another Government guarantee of depositors’ funds, BoG adopted the approach of transferring depositors’ claims against the five banks to an acquiring bank to grant them access to their funds sooner than later.In the absence of any existing bank willing to acquire the deposit liabilities of the five banks, the Government triggered the “b ridge bank ” tool under the banking law and established a new bank called Consolidated Bank, Ghana (CBG) fully capitalized at GH¢450 million and licensed by BoG to assume the deposit liabilities and the few remaining good assets of the five banks.
The Government issued a bond (GH ¢7.6 billion) to finance the gap between the deposit liabilities and good assets assumed by the bridge bank.
16 22.
As part of the comprehensive clean-up of the banking sector, the Bank of Ghana identified two additional banks– Premium and Heritage–for resolution in December 2018 and on the 4 th January, 2019 announced a revocation of their banking licences, the appointment of a receiver, and the transfer of their deposit liabilities and good assets to CBG, with financial support by Government .
Specifically, Premium Bank was assessed to be insolvent as of 31 st December 2018 and was also found to have obtained its banking licence b y false pretences on the basis of false and non- existent capital; while Heritage Bank was found to have been formed with suspicious capital and also failed to meet the Bank of Ghana’s new minimum capital requirement as of 31st December 2019.
Following the recapitalisation exercise that ended at the close of business on 31 stDecember 2018, 23 banks met the new minimum paid-up capital of GH ¢400 million either on their own, by merging with other banks, or by acquisition through other banks or the Government-administered scheme called the Ghana Amalgamated Trust.The recapitalisation exercise has since repositioned the banking sector as better capitalized, liquid, stronger, and more resilient.
On completion of the banking sector clean-up, the Bank of Ghana turned its attention to the specialised deposit -taking institutions sector made up of savings and loans,finance houses, and microfinance companies.
Between May and August 2019, the Bank of 17 Ghana revoked the licences of 347 insolvent microfinance companies (including 155 companies that had already ceased operations) and 23 savings and loans companies and finance house companies, all of which were assessed as insolvent.
A receiver was appointed for these companies and refund of depositors’ funds have been progressing steadily, with funds provided by the Government.
Finally,the Bank of Ghana also revoked the licences of a number of other failed institutions, namely,29 microcredit companies (including 10 of such companies that had already ceased operations), a leasing company, and a remittance company, while referring them to the Registrar General for liquidation under the NBFI Act and other relevant legislation.
The Receivership Process 26.
Madam Chairperson, let me now update you on the progress made so far on the receivership process for the banks, savings and loans companies, finance, houses, and microfinance companies whose licences were revoked.
The BoG r emains confident that despite the initial hiccups associated with re cords, the receivership process has progressed steadily.
T he receivers continue to validate claims of all claimants of the defunct institutions, pay out depositors’ claims, and realise and recover assets to pay remaining claims to the extent of any asset realisations.
18 27.
As we speak today, total loans taken over by the Receivers amounted to GH¢ 16.56 billion, while total proceeds realized up to date are above GH¢1.2 billion.
These proceeds were rea lized through loan repayments by customers, investments recovered, proceeds from sale of vehicles, and other income traced and recovered.
To some extent, the r ecovery efforts have been hampered by frivolous legal challenges mounted by some complicit persons intending to frustrate the receivers.
These schemes ought not to be countenanced by the courts, as they do not inure to the benefit of the real victims of these multiple failures, the taxpayer s that have had to pay for the cost of these failures, and must not be left holding the raw end of the stick in the circumstances.
Details of suspicious transactions, misappropriation of funds, false accounting and misreportinghave been referred to the criminal investigative authorities and the Attorney General .
We expect that criminal behaviour, once established, will be prosecuted and perpetrators brought to book.
We will continue to urge t he law enforcement agencies and criminal investigative authorities to expedite their investigations into several suspicious transactions brought to their attention by the Receivers to facilitate prosecutions that may be necessary to ensure that justice is served.
On our part, the Bank of Ghana has undertaken a comprehensive and detailed internal investigation into possible 19 complicity of our staff.
Management has sent clear signals to staff about the need to ensure discipline and professionalism in line with the Bank’s new Code of Conduct that was launched in May 2019 alongside the establishment of the Ethics and Internal Invest igations Office.
The Malaise in the Banking Sector and the Broader Issues 30.
The revocation of the 420 licences in total was a painful but necessary exercise, to sanitise our financial system while creating the environment for stronger and well -run institutions to thrive and play their expected role of supporting businesses of all sizes and households.
In the case of the failed banks, one thing was clear and that is, banks were set up overnight by little or no capital and by persons with little or n o experience in running successful banks.
What is more, all the resolved banks were managed or controlled by shareholders with complete disregard for prudential norms and best practices in corporate governance and the management of banks.
It became clear t hat these institutions were set up to use depositors’ funds to finance other businesses of shareholders or other related or connected companies.
In the process, oligarchies were formed involving various groups of companies under the control of common shareholding by a few politically -connected persons whose relationship with political authorities gave them a false sense of 20 protection from the law and dared to do the unthinkable at the expense of depositors whose funds were used to keep these groups going.
Complicity of Bank of Ghana as the regulator and supervisor of the industry was another key factor.
Poor licensing practices that led to licences being issued without the appropriate due diligence on shareholders, capital, and other key areas was evident.
Poor supervision, and the granting of excessive levels of liquidity support to failing banks, without addressing the underlying problems that led to the illiquidity and insolvency of these institutions did not help matters.
The underlying causes of the multiple savings and loans, finance houses, and microfinance company failures were no different from the banks.
Poor licensing standards, weak capital, weak governance, and accountability lending to related parties and cronies, poor risk management, and misreporting, among other things.
Restoring the Health of the Banking Sector 34.
Madam Chairperson, the Bank of Ghana has every reason to feel confident about gains and achievements made so far in the financial sector.
The financial sector is currently healthier and better able to withstand external shocks compared to what it was at th e beginning of 2017.
It is better capitalized, liquid, profitable, and more 21 efficient and has adequate capital buffers to manage adverse external developments.
Such an optimistic outlook seemed nearly impossible in 2017 when the reforms started.
Madam Chairperson, allow me to turn attention to the various postclean-up reforms the Bank of Ghana has undertaken to address the key causes of the systemic failures that took place,and to address what we saw as overall risks to the stability of the industry.
Madam Chairperson, o ur reform approach has been three - pronged, involving (i) Enhancements to the regulatory regime; (ii) Sharpening the Bank’s monitoring, supervision and enforcement tools; and (iii) enhancing the capacity and ethical culture of Bank of Ghana’s supervisory departments and th at of th e industry .
Let me expand on these three components of our post-clean-up reform initiatives.
(i) Enhancements to the Regulatory Regime for Banks and SDIs • Enhancements of our regulatory regime is key to closing the regulatory gaps that some banks and SDIs exploited leading to their ultimate demise.
To help address the underlying causes of the failures of banks and SDIs, the Bank of Ghana has introduced a number of rules (such as the Corporate Governance Directive and the Fit and Proper Person Directive) to ensure 22 o that shareholders of banks and SDIs do not only have the requisite amounts of capital, but that they also are of the calibre, a nd have the integrity to exercise control over these institutions primarily in the interest of depositors, and other key stakeholders including the stability of the entire financial system; o that bank and SDI Boards are composed of persons that understand their duties as directors of financial institutions, are capable of exercising strong and independent oversight, and are able to ensure that the interests of all relevant stakeholders are protected; o that banks and SDIs have key management personnel that h ave adequate qualifications and experience and integrity to effectively manage these institutions ; and o that banks fully embed compliance with regulatory requirements and ethical standards as part of their overall risk management frameworks, with complian ce officers and Boards ensuring that compliance is prioritised.
We have also introduced a new Capital Requirement Directive under the Basel II/III framework for regulating banks, to ensure that banks set aside adequate capital to cover unexpected losses, so they are more resilient to capital shocks.
23 • In addition to these rules, a number of other rules are in the process of being finalised for consultation with the industry.
These will among other things (a) strengthen the risk management requirements for ba nks and SDIs; (b) introduce more transparency in conglomerate or financial group structures to prevent the abuses of banking affiliates that were witnessed in the crisis; (c) strengthen the emergency liquidity support framework to remove opportunities for abuse; (d) remove ambiguities and clarify the boundaries of the mandate of the SDI sector so that institutions stay within the remit of their licenses and do not take on risks for which they do not have adequate capital and risk management systems to support; and (e) address weaknesses in business models of the SDI sector.
(ii) Sharpening our monitoring, supervision and enforcement tools • In addition to new rules of the game, we have introduced measures to ensure that the main instruments used in enforcing our rules are sharpened.
Specifically, (a) we have revamped our structures and procedures for licensing with more thorough due diligence and capital verification processes; (b) introduced an en hanced process for making new rules which involve a more structured stakeholder consultation 24 process to transparency in the policy development process and promote smooth implementation of new rules ; and (c) introduced enhanced processes for examination (on -site and off-site) of our regulated institutions, increased the frequency of on -site examinations, and strengthened accountability for supervisory follow-up of examination findings.
• We have also recently invested in a new state -of the art surveillance software and its development is almost complete.
This new electronic surveillance system will not only help to capture supervisory data from regulated institutions more accurately and help prevent the high incidence of misreporting we witnessed with the fail ed institutions, but it will also enhance the analytical capacity of our supervision teams and help with more effective reporting of supervisory concerns to management of the Bank of Ghana for appropriate action to be taken.
(iii) Enhancing the capacity and ethical culture of Bank of Ghana’s Supervisory Departments • We have increased the budgetary resources available to our Departments that regulate and supervise the financial sector.
Secondly, we have increased the staff strength of our Banking Supervision, Other Financial Institutions Supervision, and Financial Stability Departments to enhance their capacity, 25 drawing on additional skills in the Bank of Ghana as well as from the private sector.
Thirdly, we have commenced the redesign of training programme s for staff of our Supervision Departments, to further enhance the quality of policy development, examinations, and reporting on regulated institutions.
• In addition to critical training and technical assistance provided by the IMF, World Bank, foreign reg ulatory authorities, among others, the Bank of Ghana is designing a more structured standing training programme to retool its supervisory staff to promote higher standards of professionalism and ethical behaviour.
The key objective here is to ensure that our teams are better able to identify early warning signs, enforce regulatory requirements and ensure that prompt corrective action is taken by banks and SDIs to help reduce the risk of failure.
Madam Chairperson, these are but a few of the initiatives the Bank of Ghana has undertaken under my leadership over the last three years.
With the objective of promoting the overall resilien ce of the banking sector, and beyond that to promote the banking s ector’s effectiveness in supporting inclusive and sustainable economic growth, we have also embarked on a number of other reforms.
These include (1) new rules to promote Cyber and Information 26 Security; (ii) enforcement of NPL write-off policy to ensure that banks fully account for and absorb losses incurred from loans they grant that they are unable to recover within specified time periods; (iii) new policy initiatives to promote lending to SMEs by earmarking 2 percentage points of primary reserved kept by banks with the Bank of Ghana for lending to SMEs, to help increase the availability of credit to the private sector and at affordable rates ; (iv) launch of the sustainable banking principles by which banks in Ghana will conduct their business to promote responsible and environmental and social practices that inure to the benefit of the economy and communities otherwise at risk; and (v) continuous regulatory policy enhancements to promote more innovation in the financial system through appropriately-regulated technologies to drive new savings, credit, and payment products and services that promote efficien t, convenie nt, and inclusive financial services.
We have also deepened cooperation with key stakeholders to enhance our supervisory efforts.
Together with other financial sector regulators under the auspices of the Financial Stability Council recently established by the President, we have strengthened monitoring of overall risks to the financial system, while the Bank is also en suring that it strengthens supervisory cooperation with external supervisory authorities in respect of banks operating in Ghana but with foreign parentsor affiliate companies.
27 39.
The recent launch of the Ghana Deposit Protection Scheme is another feature of a more resilient financial safety net for Ghana.
The Ghana Deposit Protection Corporation (GDPC) is now fully operational, with all banks, savings, and loans companies, finance houses, microfinance companies, and rural and community banks, currently admitted as members of the scheme.
Initial premiums paid by these member -institutions and subsequent annual premiums that will be paid will be invested by the GDPC and used to pay depositors of these institutions in the event they fail in future.
Conclusion 40.
Madam Chairperson, our mandate to promote the stability of Ghana’s financial system involves a dynamic process of constantly reviewing our regulatory and supervisory framework and tools to ensure that they are able to help us deliver on the mandate.
What I have attempted to do in the last hour or so, has been to recount the state of the banks and SDI sector which we inherited when we took office almost 3 years ago , with a state of affairs that would later be characterized as perhaps the worst financial sector crisis the country has ever experienced .
What was more worrying was that this happened a decade after the global financial crisis from which it appeared the country had learnt no lessons about the consequences of poor regulation and supervision of financi al institutions that are often prone to greed and excessive risk -taking at the expense of clients and sometimes ultimately taxpayers.
I have also attempted to 28 explain the key underlying causes of the multiple failures we inherited, while taking the time to highlight some of the key reforms we have since undertaken not only to clean up the colossal mess, but also to rebuild the regulatory regimes, and improve on the structures and systemsto help establish a strong and efficient financial sector that will support the country’s developmental goals.
Madam Chairperson, let me assure you and the good people of Ghana that the Bank of Ghana under my leadership and hopefully long thereafter, will uphold the highest standards in the regulation and supervision of financial institutions entrusted to us by law, and we will not fail the people of thi s dear nation.
We count on the support of all stakeholders as we focus on delivering on our mandate.
So help us God!
04/12/2019 Elsie Addo Awadzi on turning around Ghana’s banking system - Central Banking 1/3 Elsie Addo Awadzi on turning around Ghana’s banking system The Bank of Ghana led a multi-pronged effort to rescue or resolve several banks and hundreds of smaller firms Daniel Hinge @dan_hinge 04 Dec 2019 The Bank of Ghana is starting to emerge from an almost two-year effort to turn around its banking sector.
The action began in 2017 with the closure of two banks, says Elsie Addo Awadzi, deputy governor.
Several other firms – seven more banks and hundreds of non-banks, including microfinance firms – were resolved in the subsequent months.
“A number of these banks had already been found to be insolvent, going as far back as 2015,” says Awadzi, speaking on the sidelines of Central Banking’s autumn training series in Cambridge.
When Ernest Addison took over as governor in April 2017, he made it a priority to turn things around.
Cleaning up the banks was also a condition for International Monetary Fund support.
  00:35 10:52    04/12/2019 Elsie Addo Awadzi on turning around Ghana’s banking system - Central Banking 2/3 The work put great pressure on the central bank’s staff.
Supervisors started with an asset quality review, which showed many firms had “passed the stage where you could use supervisory tools to try to make them recover”, says Awadzi.
That necessitated the simultaneous resolution of several banks.
Pre-resolution planning was a huge job, to ensure technical assessments were right and the planned actions were legally watertight.
Assessments for every firm had to be updated regularly in case they recovered.
“That process was tedious,” says the deputy governor.
Logistics were also challenging.
When the central bank was ready to act, it needed security teams and new bank managers ready to swoop in and take over the administration of failing institutions.
“For some things,you had to wait until the last minute because you didn’t want the word out there,” says Awadzi.
Additional issues emerged because Ghana had neither a resolution fund nor a deposit insurance fund.
Some actions had to be put on hold while these were set up.
Ultimately, the government provided the funding for both paying back depositors and covering the cost of managing the receiverships.
Many aspects of the resolution were challenged in the courts, and a few cases are ongoing.
Awadzi says a strong legal framework backing up the central bank was essential in this regard.
The central bank had broad powers to protect financial stability.
“Make sure you have a good legal framework in place,” she urges other central banks that may find themselves in the same situation.
“You may never need it if your institutions never fail, but what you don’t want is to have failed institutions without the legal powers to act.”
The banking system is now returning to stability, and trust is starting to be rebuilt, says Awadzi: “I like to say that, given the numbers involved, we did a pretty good job.”
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FORMAL LAUNCH OF THE GHANA SUSTAINABLE BANKING PRINCIPLES SPEECH BY DR.
ERNEST Y. ADDISON GOVERNOR, BANK OF GHANA VENUE: ACCRA INTERNATIONAL CONFERENCE CENTER DATE: NOVEMBER 27, 2019 Your Excellency, ALHAJI DR.
MAHAMUDU BAWUMIA, VICE PRESIDENT Hon.
Charles Adu Boahen, Deputy Minister for Finance President of the Chartered Institute of Bankers, Ghana (Rev.
Patricia Sappor), President of the Ghana Association of Bankers, Mr.
Alhassan Andani Chief Executive Officer of the Ghana Association of Bankers, Mr.
D. K. Mensah The Executive Director, Environmental Protection Agency, Mr.
Pwamang Managing Directors of Banks Dr Albert Touna Mama, The IMF Country Resident Representative Representatives from the International Financial Corporation (IFC) Representatives from Swiss Secretariat for Economic Affairs (SECO) Chairman, Sustainable Banking Principles Committee, Mr.
Musah Salah Distinguished Guests, Ladies and Gentlemen, Good Morning.
I wish to welcome you all to this landmark event, the formal launch of the Sustainable Banking Principles (SBPs) for Ghana’s banking sector .
The SBPs provide the guiding principles to underpin effective Environmental and Social Risk Management (ESRM) policy frameworks for banks.
In an environment of climate change, environmental degradation, changing demographics, among others, economic growth objectives are now intertwined with sustainable socio -economic development objectives.
Considering the important role of the financial sector in economic development, the issue of sustainable financing is critical and therefore requires a robust environmental and social risk management ( ESRM) policy.
Your Excellency, distinguished ladies and gentlemen, responsible banking practices will have to ensure that environmental and social risks associated with projects financed by banks are well managed.
For banks to remain sustainable over the long -term, it is important that their own internal operations and financing activities meet the present needs of economic agents today, while not compromising the ability of future generations to meet their own needs.
The Bank of Ghana therefore recognises environmental and social risk management (ESRM) as key component s of banks‘ overall risk management strategy.
We are not alone in this regard.
Central Banks and banking regulators around the world have mainstreamed ESRM in their prudential risk assessments, given the potential impacts of environmental and social factors on the long-term safety and soundness of banks.
Your Excellency, t he SBPs we are about to launch today therefore comprises seven principles for: i. identifying, measuring, mitigating and monitoring environmental and social risks and opportunities in banks’ business activities; ii.
promoting good environmental and social governance practices in banks’ internal business operations; iii.