Management consultant and retired Board Chairman of the Standard Bank Ghana Limited, Dr Ishmael Yamson, has professed tough love for the Bank of Ghana’s (BoG) ongoing reforms aimed at ridding the banking sector of weak and toxic banks that pose systemic risks to customers and the economy in particular.
He has, therefore, asked the BoG not to be afraid to revoke the licences of more banks if it turns out that some or any of the remaining 30 banks have/has infringed upon banking regulations similar to what led to the collapse of the seven defunct banks.
In doing that, however, Dr Yamson said the BoG “should not care who is involved” but should be guided by a clear strategy that aims to build a solid, well governed, capitalised and respected banking sector.
“To be honest with you, if the central bank finds out that some of the existing ones have not changed from their bad ways, then they too should be dissolved.”
“I am clear in my mind about that,” he told the Daily Graphic in a recent interview that discussed the aftermath of the collapse of seven banks between August 2017 and August this year.
In revoking the licences of the all indigenous banks, the BoG said the actions were necessitated by various degrees of regulatory infractions that ultimately made the lenders illiquid and deficient in capital, resulting in them posing systemic risks to counterpart-banks, the banking sector and the economy as a whole.
Explaining the bases of his strong support for the BoG’s tough actions, Dr Yamson said as agents of financial intermediation, banks served as the veins of the economy through which the blood, which is money, is carried to where they are most needed.
“So, if you mess it up, you are messing up your life.
We must demonstrate that we have a robust, credible, trustworthy, well governed and capitalised financial sector and the people managing it are people fit for purpose,” he said
This, he said was because: “You cannot build a strong economy on a shaky financial sector.
If we carry weak banks, it undermines the confidence in the financial system and you have to clean it up,” he said.
He thus disagreed with some concerns that the clean-up exercise was orchestrated against specific banks.
He was hopeful that the clean-up will succeed and result in the creation of resilient banks that can also compete internationally, similar to what led to the influx of Nigerian banks into the country in recent times.
Between 2004 and 2006, the Central Bank of Nigeria (CBN) undertook a far-ranching reform that crashed bank numbers in the country from 89 to 25.
The exercise, which was initiated and supervised by former CBN Governor, Prof. Charles Soludo, led to the revocation of the licences of 14 banks and dozens of forced mergers and acquisitions.
Although the circumstances of that exercise are not entirely similar to those in Ghana, Dr Yamson said prospects of Ghana’s clean-up exercise will be similar to that of Nigeria.
“The situation we are in is the same situation,Nigeria was in so many years ago and you had a governor who came and cleaned up the place.
“Now, you have Nigerian banks everywhere competing.
Why can’t we have Ghanaian banks like that,” he asked.
Dr Yamson also encouraged the BoG governor, Dr Addison, to stand firm and apply the law against erring banks.
He said he was in full support of the governor’s actions, adding that “we should learn to do what is right.
“I will say again that those who are obsessed with the narrative that the central bank is destroying local banks should stop because it is about banks that are well governed and those that are not.
“Licences don’t have nationality; does the central bank issue out special licences for foreign banks?” he asked.
“So, if someone decides that he/she is not going to obey the regulations, why should the governor be blamed,” he said.
When asked how Dr Addison can withstand political pressure within and outside the government, Dr Yamson said, “he should stand by his convictions.”
“If you are a governor, you should have the integrity of your own conscience and be able to defend yourself.
“You should always be able to prove that what you are doing is in the best interest of the country, not a party,” he added.
Dr Yamson, a celebrated executive, has enormous expertise in management and corporate governance that straddle banking, fast moving consumer goods (FMCG) and consulting, textiles, beverage the industries among others in Africa and Europe.
In the banking sector, he previously served on the board of Barclays Bank Ghana for 10 years before moving to the Standard Chartered Bank where he chaired the board for 13 years prior to his retirement in June this year.
Within the period, the bank consolidated its position as a tier one lender, targeting the upper and middle class and maintained strong growth in top and bottom line.
He currently chairs the board of Scancom Ghana Limited, operators of MTN, among others.