The Chief Executive Officer of Databank, Kojo Addae Mensah has attributed the collapse of some local banks to poor governance and a lack of understanding of risk management.
According to him, the Bank of Ghana and other regulators in the Ghanaian banking space must improve the existing governance structures for banks in the country.
Speaking on the Citi Breakfast Show, Chief Executive Officer of DataBank, Kojo Addae Mensah said regulators need to improve risk management exist in our local banks.
Mr. Kojo Addae Mensah blamed some business owners for assuming a know it all approach towards dealing with internal corporate operations.
Mr. Addae Mensah also advised banks to run with a proper structure to ensure they don’t eventually fold up.
“From where I sit, I think it is a poor governance issue, that is the bottom line, governance and poor risk management and I think the central bank and the regulators must work harder on the Governance structures that run these various banks. Sometimes we run our business as though I am the boss and what I say is final but that is not how you should run it. You run it with structure. It is not about the individual it is the system and the system must work”
Mr. Addae Mensah’s comments follow a cleanup of the sector by the Bank of Ghana. Ghana’s financial space now has only 23 banks, down from the 34 that were operating in the country as of January 2017.
Many of the banks that previously operated in the country have folded up and taken over by other banks due to various new regulations introduced by the Central Bank including the GHS 400 million minimum capital requirement.
In August 2017, the Bank of Ghana (BoG) gave GCB Bank Ltd the green light to acquire two local banks UT and Capital bank due to severe impairment of their capital.
In August 2018, the Bank of Ghana consolidated five other local banks into what it calls the Consolidated Bank Ghana limited.
The banks were Beige, Construction, Royal, uniBank and Sovereign Banks. Beyond have liquidity challenges, some of them were engaged in activities that the Bank of Ghana considered criminal.
The bank of Ghana in a statement on January 4, 2019, following the expiration of the minimum capital requirement deadline, said, all the 23 remaining banks have met the new minimum paid-up capital of GHC400 million.
The Bank of Ghana further explained that it had revoked the licenses of Premium Bank and Heritage Bank and approved their takeover by Consolidated Bank Ghana Limited.
It said in the case of Heritage Bank; the institution had questionable sources capital.
Meanwhile, GN Bank has been downgraded into a savings and loans company following its inability to meet the minimum capital requirement.