Business News of Wednesday, 13 September 2017

Source: citifmonline.com

BoG to sanction banks for breaking rules

The Bank of Ghana(BoG) has warned banks in the country to desist from acquiring shares in companies that do not have pure financial obligations.

According to the central bank, the phenomenon has led to banks diversifying their capital base which is unhealthy for the financial sector.

Speaking at a breakfast meeting at the National Banking College, Head of Banking Supervision at the Bank of Ghana, Mr. Raymond Amanfu stated that the central bank will henceforth severely sanction banks that flout the rule.

“I believe that we have to be very careful as banks management. This concept of Holding Groups. You find banks now going into all kinds of grouping. We have construction firms, they farms, they have energy related companies all in a group. The law makes it very clear, that every bank that wants to go into any group holding, must be purely a financial holding and you are now going to report on consolidated basis,” he said.

Mr. Amanfu explained that the move is aimed at averting financial crisis that may be caused by banks venturing into unauthorized areas.

He announced that the supervisory department of the central bank will now collaborate with other regulatory agencies in the financial sector to enforce the rule.

“We are going to see to it that you don’t run trip your capital. We are going to have joint supervisory team from the regulators of the four institutions. NPRA, NIC and the Pensions Fund,” he noted.

“When we visit your bank, we are looking at everything about your bank. It’s very important to understand that you have to register your holding company with us. We have to know the board structure, the linkages, your accolades. Any non-disclosure can bring dire consequences,” he warned.