Bank of Ghana to introduce corporate governance guidelines for banks
Bank of Ghana is set to unveil a new corporate governance guideline that that will ensure financial soundness in the banking sector and improve economic efficiency and growth is in the works and expected to be introduced by January next year.
Speaking to stakeholders in Accra, at an IFC and BoG partnership event to boost good corporate governance, Bank of Ghana (BoG) second governor, Dr Johnson P. Asiama emphasized that in contemporary banking, sound corporate governance was particularly important as the rapid changes brought about by globalization, deregulation and technological advances are increasing the risks in banking.
According to the deputy governor, the BoG issued a Corporate Governance Exposure Draft in 2014 to elicit comments and constructive contributions from the industry.
The draft document has incorporated suggestions from industry, including a review by the IFC, and ‘remains work-in-progress that would be issued appropriately when completed’.
Some of the highlights in the guidelines, Dr Asiama said will address: the tenure of CEOs which is expected to be capped at a maximum of three terms of 5 years per term. Also, Non-Executive Directors shall have a tenure of three years for no more than two terms, and shall be in the majority on every Board.
Others in the case of foreign banks, the positions of Managing Director and Board Chair cannot be occupied concurrently.
Additionally, the size of bank Boards shall be limited, as well as the retiring age for Directors prescribed; as well as the Disclosure of attendance at Board meetings by Directors in annual accounts.
“Banks need sound corporate governance practices in order to build public trust and confidence, as well as credibility in their operations, to promote the safety and soundness of the entire banking system. Without sound governance structures, banks stand the chance of eroding public trust and ultimately put shareholders’ investments and depositors’ funds at risk”.
To underscore the importance of corporate governance in the industry, Dr Asiama also added that the new Banks and Specialised Deposit-taking Institutions (SDI) Bill, which has been passed by Parliament, has explicit provisions on corporate governance, which suggests a shift from a principle-based approach to that of rule-based.
“I must say that the Bank of Ghana will adopt a combination of the two approaches in developing a sound and effective corporate governance framework for the industry” he said.
Senior Country Officer for IFC, Joseph Akwasi Kuma, highlighted that the partnership was a technical assistance programme with funding coming from the Swiss State Secretariat for Economic Affairs(SECO), while the BoG is the implementing institution.
He also added that there was the need to engage the regulator (BoG) who will get the ‘buy in from the financial institution’ to help build a robust corporate governance.
