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The Bank of Ghana (BoG) has issued a firm reminder to the public and financial institutions that individuals implicated in the 2017-2019 financial sector clean-up, as well as former directors of failed banks and Specialised Deposit-taking Institutions (SDIs) since the enactment of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), are barred from holding key positions under the fit and proper persons criteria.
The central bank emphasised that poor corporate governance was a major factor contributing to excessive and imprudent risk-taking within the financial sector.
This mismanagement led to the collapse of several regulated financial institutions (RFIs) licensed by the BoG, necessitating the comprehensive banking sector clean-up between 2017 and 2019.
To sustain the improvements from this clean-up, the BoG introduced the Corporate Governance Directive in 2018 and the Fit and Proper Persons Directive in 2019.
These directives aim to strengthen corporate governance practices within RFIs and reinforce the BoG’s gatekeeping role in the financial sector.
Furthermore, the Corporate Governance Disclosure Directive was issued in 2022 to enhance governance disclosure practices by RFIs in line with Pillar III of the Basel Capital Accord, relating to regulatory and public disclosures.
Under the Fit and Proper Persons Directive, 2019, significant shareholders, directors, and key management personnel must be of good repute and possess adequate knowledge, skills, and experience.
The standards consider several criteria, including whether a person has been a director or involved in the management of any company or institution that had its licence revoked, was wound up by a competent authority, or went into receivership, insolvency, or involuntary liquidation.
“In order to further promote the safety and soundness of RFIs, the BoG is by this Notice bringing to the attention of RFIs, their obligation under the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) and the Fit and Proper Persons Directive, 2019 to ensure the continuous fitness and propriety of Significant Shareholders, and Persons, serving as Directors and Key Management Personnel of RFIs,” the BoG said in a statement issued on Thursday, 11 July 2024, signed by the Secretary, Sandra Thompson.
“The BoG reminds the public that persons who have been directly implicated in the 2017-2019 Financial Sector clean-up, and all previous directors of failed banks and SDIs since the enactment of the Banks and Specialised Deposit-Taking Institution Act, 2016 (Act 930) do not qualify to hold key positions under the fit and proper persons criteria,” the statement added.
The BoG urged banks, SDIs, and the general public to adhere to these regulations to ensure the ongoing integrity and stability of the financial sector.
Source: classfmonline.com
