Question

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

As A manager of a bank that was not closed down,I will be taking following measures in order to ensure that my bank would not be caught up in same situation as the collapsed banks-

1.I will look to ensure an efficient corporate governance is present in my overall organisational structure that is capable enough to detect any kind of functional deficiency.

2. I will also try to maintain an adequate asset quality so that they have higher recovery capability even in the adverse economic scenario.

3. I will try to cut upon unnecessary risks so that my exposure to risky assets would be limited and it would be advantages for bank in following with the regulatory requirements and facing up with the adverse economic scenario.

4. Ensuring complete adaptation to the regulatory framework and acting on behalf of the interest of the stakeholders.

5. Lending should only be based upon past performance and the creditworthiness of the borrower and it should never be based upon any kind of personal bias so that efficient lending procedure could be followed.

6.rules and regulation maintained by central banks and monetary policies framed by central banks should always be followed and disclosure requirements of Central banks should be maintained