People involved in cleaning up the banking sector excluded from key positions

By Juliet ETEFE

The Bank of Ghana (BOG) has issued a notice emphasising that significant shareholders, directors and key management personnel directly involved in the clean-up of the financial sector are not allowed to hold key positions in regulated financial institutions (RFIs).

The action aims to address the weak corporate governance that contributed to the failure of several information requests, which led to the need to clean up the banking sector between 2017 and 2019.

To ensure good corporate governance practices, the Board of Governors issued the Corporate Governance Directive in 2018 and the Fit and Proper Legal Persons Directive in 2019, followed by the Corporate Governance Disclosure Directive in 2022, aimed at streamlining corporate governance disclosure practices.

The BoG Directive on the fit and proper performance of persons exercising supervisory and management functions requires that persons exercising supervisory functions have appropriate knowledge, skills and experience and enjoy a good reputation.

This directive deprives the right to practice the profession of persons employed in institutions whose licence has been withdrawn, which have been placed under restructuring proceedings or which have been liquidated by the competent authority.

Among other things, “The standards of fitness and integrity take into account whether a person has been a director of, or directly involved in the management of, any company or institution: whose licence has been withdrawn; or which is or has been wound up by a court of competent jurisdiction or other authority in or outside Ghana; and which has become bankrupt, insolvent or subject to compulsory liquidation.”

“In order to further promote the safety and integrity of RFIs, the Board, in this notice, draws the attention of RFIs to their obligation under the Banks and Specialised Deposit-Taking Institutions Act 2016 (Act 930) and the Authorised and Competent Persons Directive 2019 to ensure the continued integrity and due diligence of significant shareholders and persons acting as directors and key management personnel of RFIs.

“BOG reminds the public that individuals who were directly involved in the financial sector cleanup in 2017-2019, as well as all previous directors of failed banks and SDIs since the enactment of the Law on Banks and Specialized Deposit-Taking Institutions of 2016 (Law 930), are not eligible to hold key positions in accordance with the criteria for competence and competency of persons,” the BoG press statement said.

The notice, addressed to banks, specialised deposit-taking institutions and the general public, advised them to comply with these regulations in order to enhance the safety and integrity of the sector.

It was alleged that weak corporate governance contributed significantly to excessive and unwise risk-taking in the financial sector, which led to the collapse of some Regulated Financial Institutions (RFIs) licensed by the Bank of Ghana (BoG), which consequently necessitated a banking sector clean-up between 2017 and 2019.