Prudential management in the banking industry in Ghana: a case study of SSB Bank

The banking industry is an intermediary between borrowers and lenders. It pools the funds deposited by the public and invests these funds in assets like loans and overdrafts to accelerate the growth of the economy. A general introduction of the topic” Prudential Management in the Banking Industry in Ghana, a Case Study of SSB Bank was given in Chapter One. In the introduction, the challenges facing the banking industry after the financial sector adjustment programme were highlighted to give a broad spectrum of the need to manage the banking industry prudentially. The objectives of the study seek to: a) Find out the general procedures and policies for the prudential management of the assets and liabilities in the banking industry; b) Take a critical look at the procedures and policies for the management of the assets and liabilities of SSB Bank; c) Find out whether SSB Bank has so far managed its assets and liabilities for the achievement of its goals and objectives; d) Identify the challenges facing the SSB Bank in its management of the assets and liabilities for the achievement of its goals and objectives; e) Suggest possible solutions to these challenges that will enable the bank manage its assets and liabilities prudentially. The origin, definition, nature and purpose of prudential management as well as contributions made by other authors were also outlined in the text. The authors whose work were reviewed include lncoom, Atta-Bronya, Botchway, Bimal, Baer, Quarde, Hermosille Dickson, Kapstein,Hempel, Cate, Anin, Asiedu- Mante, Ghosh, Pantalone and Platt. The research exercise evaluated the operations of SSB Bank in respect of CAMEL i.e Capital Adequacy, Assets quality, Management efficiency, Earnings ability and Liquidity. Conceptual models were formed to assist analysis of the findings. Drawing on the literature and the conceptual models covering the concept of prudential management, the study analyzed the results of the survey data. The main findings were that, although customers were generally satisfied with the overall service rendered by the bank, there was fairly high level of dissatisfaction and complained about aspects of the services; there was direct relationship between the number of customers and deposit; capital adequacy ratios were far above the required ratios; reserve ratios were also above the required ratios; assets quality were found to be deteriorating due to lack of logistics, untimely delivery of credit facilities, poor monitoring , and poor legal system; employees were found to be poorly motivated. In all, the findings indicate that the assets and liabilities of SSB Bank were prudentially managed. Nevertheless, the bank has not updated its strengths and weakness to meet the challenges in the banking industry. In view of this, recommendations were given to help solve the identified challenges in the research findings. Among the recommendations are: 1. Optimum capital adequacy ratios and reserve ratios must be maintained by the bank to enable it meet the demands of some customers in form of loans and overdraft. 2. Automated Teller Machines (ATM) should be installed at vantage points of the bank’s premises to ease the congestion at the banking halls.

Source: KNUST