Ban Shareholders Of Companies From Holding Management Positions – Andani

Managing Director of Stanbic Bank Ghana Limited Alahassan Andani has called for a new regulation, which will ban individual majority shareholders from being part of the top management of firms they have invested in.

It has emerged that interference by individual majority shareholders of liquidated banks in management positions contributed to their collapse.

The Bank of Ghana last year allowed GCB Bank to purchase and assume the good asset and liabilities of UT and Capital Banks due to the lack of good corporate governance practices, the excessive liabilities and failure to improve their balance sheet.

Speaking to JoyBusiness Mr Andani who is also the President of the Ghana Association of Bankers said separation of shareholders from management will help prevent conflict of interest situations.

He said, “The firm is a legal entity that has obligations and you as an individual with your shares in the institution or the bank have your personal ambitions but to the extent that personal interest reflecting the interest of the firm is there can be a massive conflict of interest problems.”

Mr Andani said, “It’s probably not prudent not to allow people with significant shareholding to also run these institutions. However, it has to do with the level of governance around the management of conflict of interest and we must have some kind of regulation that will deal with this situation.”

Apart from these two banks, five other banks including one-year-old Construction and Sovereign banks also had their licenses revoked due to excessive liabilities and bad corporate governance practices.

"This call for extensive consultation around the governance around conflict of interest. Where you are the majority shareholder it should be extremely difficult to put your personal interest aside from that of the firm,” Mr Andani said.

This has caused the central bank to introduce new corporate governance guidelines for all financial institutions under its watch.

The Second Deputy Governor at Bank of Ghana (BoG), Elsie Addo Awadzi, also earlier warned that banks who do not abide by the rules of the central bank will be penalized.

Her warning comes at a time that five financial institutions (The Construction Bank, The Royal Bank, uniBank, BEIGE Bank and Sovereign Bank) have been merged to form The Consolidated Bank of Ghana Limited.

The Bank of Ghana’s decision to combine the banks was based on investigations finding several malpractices including misapplication of funds.

“What happened bears testimony to the fact that this is a new day and we are building a new culture of integrity and trust within the banking sector,” Awadzi avowed.

She explained that in March 2018, an administrator was sent to investigate wrongdoings at one of the collapsed banks, uniBank.

Upon investigation, the central bank found that the bank was flubbing bank sheet numbers. Scores of financial transactions were improperly recorded. A paper trail led BoG to find transactions were not in the benefit of depositors.

Following the banks’ collapse, the government of Ghana has issued a ¢5.7 billion bond to support the new Consolidated Bank.

BOG issued a statement detailing that all funds at the banks have been transferred to The Consolidated Bank.

The central bank has also been assuring customers that their deposits were safe and must now conduct all businesses through their respective banks that have now become branches of the Consolidated Bank.

All Board of Directors and shareholders of the former banks had their contracts terminated.