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Business News of Tuesday, 8 November 2016

Source: citifmonline.com

BoG, IFC to tighten banking regulations

The Bank of Ghana(BoG) has disclosed that it will soon publish a reviewed draft document designed in partnership with the International Finance Corporation (IFC), aimed at enhancing good corporate governance in the banking industry.

The draft document which was originally designed in 2014 is also aimed at strengthening the oversight responsibilities of the central bank to protect depositors’ funds.

Speaking at the launch of the BoG/IFC partnership in Accra, the Second Deputy Governor of the Bank of Ghana Dr. Johnson Asiama highlighting some areas of the document maintained that it will transform the banking industry.

He pointed out that , “the tenure of CEOs will be capped at a maximum of three terms of five years per term, secondly non-executive directors shall have a tenure of three years for no more than two terms and shall be in the majority of every board”.

He added that “at the minimum, every bank shall have at least two board sub-committee specifically on audit and risk”. “Fourthly the risk and audit committees shall be chaired by non-executive director.

Fifth the non executive director’s independence has been explicitly defined,” he said. He disclosed that the managing director and board chair positions of foreign banks cannot be occupied concurrently by an individual.

Outlining some more provisions in the reviewed document, Dr. Asiama stated that competencies for board membership of banks shall be explicitly defined in accordance with Basel requirements.

“The size of bank boards shall be limited as well as the retiring age for directors prescribed. Nine, disclosure of attendance at board meetings by directors in annual accounts shall be enforced,” he said adding that cross directorship will be discouraged He stated that another important area of the document is that additional directorship engagement will be limited to no more than five, while evaluation of individual directors performance and collective performance by external agents shall be enforced.

Meanwhile, a Senior Country Officer of the IFC, Joseph Akwasi Kuma told Citi Business News Ghana’s banking sector needs Good Corporate Governance to reassure international investors of transparency. According to him, it is important to have people with integrity in the banking sector.