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Business News of Sunday, 26 July 2020


Republic Bank targets achieving appropriate balance between risk and return

File photo: Republic Bank File photo: Republic Bank

The Management of the Republic Bank Ghana has said the bank is targeting achieve an appropriate balance between risk and return and minimise potential adverse effects on the Group’s financial performance.

The bank stated in its 2019 annual report that it’s activities expose it to a variety of financial risks and those activities involve the analysis, evaluation, acceptance and management of some degree of risk or combination of risks.

“The Group’s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls and to monitor the risks and adherence to limits by means of reliable and up-to-date information systems.

The Risk Management and Compliance Department regularly reviews its risk management policies and systems to reflect changes in markets, products and emerging best practice.The objective of the Risk Management and Compliance Department is to ensure that the Group’s operations are carried out in a manner to ensure that risks are balanced with rewards.

The Risk Management and Compliance Department ensures that the Group complies with all prudential and regulatory guidelines in the pursuit of profitable banking opportunities while avoiding excessive, unnecessary and uncontrollable risk exposures. Risk is an inherent feature in the business activities of the Group and therefore the Group has put in place various mitigating measures to prevent their occurrence,” the report stated.

It added: “The Board of directors is the ultimate authority for approving large credit exposures. It has delegated certain limits in amounts for approval to the Finance and Credit committee.”

Finance and credit committee of the Board

The Finance and credit committee is chaired by a non-executive director. It is vested with power to approve credits facility which is above the limit of the credit committee. In addition, this committee of the Board ensures that the Group’s risk taking is consistent with shareholders’ expectations and the Group’s strategic plan.

The Credit committee, chaired by the Managing director, approves credit exposures with ceilings established by the Board of directors. Credit exposures are evaluated in line with the Group’s strategic plan.

Assets and Liabilities Committee (ALCO)

The Assets and liabilities committee (ALCO), chaired by the Managing Director, monitor, compile and analyse market interest rates, exchange rates and inflation rate. ALCO analyse and report on trends in volumes and volatility of advances, deposits and investments.

ALCO also considers gap analysis and capital maturity reports by Treasury Department, with its recommendations.

The committee also monitors the Group’s liquidity position and mandates the treasurer to undertake any necessary measures for changing the Group’s liquidity position, if necessary. Decisions about repricing of interest rate charged out are undertaken to align the Group’s risk and return.