Question

QUESTION 2
Over the last few months, the Bank of Ghana (BoG) has cracked the whip at the banking industry in a bid to
restore sanity in the industry. In August 2017, the UT and Capital Banks were liquidated for failing to meet
the BoG’s minimum capital ratio. The operations of UniBank, Royal Bank, Beige Bank, Sovereign Bank, and
Construction Bank ended. In their place the BoG announced a new bank called the Consolidated Bank, as part
of measures to ensure the banking sector maintains a strong indigenous presence.
The BoG’s statement on closure of the banks said an Asset Quality Review (AQR) of banks conducted in
2015 and 201S6 found that some indigenous banks had inadequate capital, high levels of non-performing
loans, and weak corporate governance which compelled BoG to crack the whip.
REQUIRED:
As a manager of a bank that was not closed down, what measures will you put in place to ensure that your
bank will not be caught up in the same situation as the collapsed banks?

Answer 1

Solution:

• As a manager of a bank, one must see everyday performance of banks need to be checked as per the banking guidelines what is carried out in a right manner or not. First thing is a proper employee performance appraisal which is a good corporate culture need to be carried out.
• According to Basel accord banks should follow adequate capital ratio which is very essential for banks to meet its daily payment needs.So banks are advised to maintain an excellent CAR (Capital adequate ratio) and CDR(Capital Depository ratio).
• To maintain this banks must take action to raise its capital by offering some innovative products to customers or perform some cross selling operations. It may change its service charge for custmers and accepts more deposits, increase its more accounts opening activities.
• Major cares should be taken for Non performing assets issued to customers. Banks must follows strict procedure like quality appraisal of it and quality review of it. it should maintain a ninety days limit plan to tackle this situation. Must follow post sanction credit management review system.
• Lastly A good corporate governance culture which is transparrent in all discipline in bank.The 4p's of corporate governance i.e people, performance, purpose and process should be managed accordingly. Their must be excellent professional relationship among borad of directors, employees,managers, and staffs. Accountability of all employees is mantained proper manner.