The banking sector clean-up exercise that resulted in the collapse of some 10 local banks was necessary, Bank of Ghana Governor Ernest Addison has justified – again.

A the recent annual general meeting of the Ghana Association of Banks held on 19 September 2024, Dr Addison said: “Let us cast our minds back to the period between 2017 and 2019 when the Bank undertook the unpleasant but needful banking sector clean-up – a process which resulted in the closure of some four hundred and twenty (420) institutions, including banks and non-bank financial institutions.”

He said the objective was “to reform the banking sector to enhance its resilience and viability while stimulating confidence in the financial system.”

Dr Addison noted that after the clean-up, the central bank “embarked on a comprehensive policy reform agenda to strengthen the regulatory environment and align the banking sector operations with international standards.”

Also, to complement the reform efforts, he indicated that the central bank “rolled out several regulatory reforms in a bid to enhance the sector’s Governance framework as well as its resilience to shocks.”

“Since 2018 to date, the Bank has issued more than 15 directives, including the Corporate Governance Directive, Capital Requirement Directive, Fit and Proper Persons Directive, Risk Management Directive, Cyber and Information Security Directive, Revised Dud Cheque Notice, and recently Guidance Notes on Banks’ Recapitalization Plan. In the development of these directives, the Bank has benefitted enormously from the technical assistance provided by our stakeholders including the IMF,” he detailed.  

Dr Addison said the Ghana Association of Banks played a crucial role in the whole process.

“It is important to note that the GAB was integral in the regulatory reform process and supported the different stages of developing the Directives that were issued. In most instances, the Directives were not issued without critical inputs and feedback from the GAB. The deepened collaboration between the Bank and GAB further improved the quality and relevance of the Directives issued in supporting the overall objective of promoting the safety and soundness of banks.