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BoG calls for cooperation in Basel II & III implementation

Author: Emmanuel Bruce
Jim Baiden. MD of Fidelity Bank
Jim Baiden. MD of Fidelity Bank

The Bank of Ghana (BoG) has asked the banks to cooperate and support it in its implementation of Basel II & III, which are new financial reporting frameworks expected to strengthen the sector.

Delivering the keynote address at Fidelity Bank’s Customer Appreciation Dinner which was held during the weekend, the Second Deputy Governor of the BoG, Mrs Elsie Awadzi, urged all banks in the country to fully cooperate with the central bank towards the implementation of the new set of rules which would ensure good financial reporting in the banking sector.

The Basel II and III are rigorous risk and capital management requirements which have become even more crucial following the recapitalisation of banks, which exposes them to more risks.

Basel  II  attempts  to    integrate   Basel   capital   standards   with   national    regulations  by    setting    the    minimum  capital requirements   of financial institutions with the goal of ensuring the  capital adequacy  of banks. It also   introduces   operational   risk considering  that  many   failures  and  difficulties   experienced   by   banks   in  history  were  not  only  attributable  to  credit  and  market  risks  but  largely  to  operational risk.

Basel   III is a framework aimed at maintaining the resilience of the global financial system.

Mrs Awadzi said the challenges confronting the banking industry were no secrets as some of them include weak business models, solvency and liquidity challenges, poor corporate governance and persistent regulatory breaches and mismanagement, which had made lots of banks vulnerable and put depositors’ funds at risk.


“Increasing the minimum capital requirement to GH¢400 million, as well as the implementation of Basel II and III are, therefore, part of the BoG’s efforts to strengthen the banking sector and we call on all the banks to cooperate with us in this regard,” she stated.

In addition to ensuring a smooth transition to the new capital requirement by December 2018, she said the BoG would also ensure that the banks brought down their non-performing loan (NPL) ratio, as well as improved their corporate governance and risk management systems.

She indicated that the BoG would also strengthen its supervisory framework to ensure that early signs of distress were identified and addressed without any challenges.

“We will also proceed with the implementation of the Deposit Protection Scheme (DPS) to provide more protection for bank depositors.

“We also encourage the banks to continuously deploy technology to provide more relevant products and services to their customers as well to promote financial inclusion and sustainable banking practices,” she added.

She noted that the BoG would support banks who would embrace the new culture of responsible banking where the trust and confidence of customers would be placed at the forefront.

Sanitise banking sector

The second deputy governor also assured the public that it would continue to sanitise the banking sector to restore confidence.

“The BoG has started taking regulatory actions recently to sanitise the banking sector and these have included revoking the licences of two banks in August 2017 and placing another one in official administration in March this year. These actions have been difficult to take but they were necessary to protect depositors, as well as mitigate risks in the financial system,” she said.

Fidelity’s support to the economy

The Managing Director of Fidelity Bank, Mr Jim Baiden,  recounted some instance of the bank’s support to the economy.

He said during the 11 years of its existence, the bank had paid over GH¢300 million by way of corporate and employee taxes.

“A few years ago, the bank also arranged financing for the procurement of security surveillance naval vessels, helicopters and other aircraft for patrol duties around the country’s oil fields. Very recently, Fidelity Bank co-managed and facilitated the issuance of a GH¢10 billion energy sector bond to sort out the oil sector debts due to the banks and bulk oil distributors,” he pointed out.

“Due to the success of the ESLA Bond, Fidelity has been appointed a co-manager for the issuance of a US$2.5 billion Eurobond for the government to support maturing bond obligations and to also re-structure other debt obligations. This year, the bank won the mandate as a transaction advisor and joint bookrunner for the Government of Ghana’s bond issuance programme for the medium and long term,” he added.

More recently, he said the bank had also co-arranged a GH¢600 million syndicated medium-term loan for the Ghana Road Fund and the Ministry of Roads and Highways to support the country’s road infrastructure projects.