The Bank of Ghana (BoG) has embarked on a limited Asset Quality Review as part of its supervisory program for 2023.
This specialized exercise is designed to assess the health of banks’ loan and investment portfolios, ensuring their asset classifications adhere to required norms and International Financial Reporting Standards (IFRS).
Speaking at the 60th Anniversary Launch of the Chartered Institute of Bankers, Dr. Ernest Addison, the Governor of the Bank of Ghana, emphasized that this initiative is a strategic move to enhance risk management and bolster the stability of the banking industry.
Building on the implementation of Pillar 1 of the Basel II/III framework in 2018, the central bank intends to further advance regulatory reforms by engaging with the Ghana Association of Banks to implement Pillar 2 of the Basel II/III capital framework.
This framework aims to ensure that banks maintain adequate capital reserves to mitigate all significant risks inherent in their operations.
The regulatory guidance will encompass various aspects of Pillar 2, including Liquidity Risk Management, Internal Capital Adequacy Assessment Process, Guide to Supervisory Intervention, Concentration Risk, and Interest Rate Risk in the Banking Book, among others.
Governor Addison also announced the successful completion of industry training on all seven Ghana Sustainable Banking Principles. The training for Principles 1 and 2 took place in 2020 and 2022, respectively, while in July 2023, the BoG concluded industry training for the remaining principles, Principles 3-7. This training was attended by Chief Risk Officers, Chief Compliance Officers, and Sustainability Officers from various banks.
Dr. Addison noted that this training is expected to result in improved industry reporting on the principles. The Ghana Sustainable Banking Principles and Sector Guidance Notes represent a significant initiative to incorporate environmental considerations, social inclusion, and good governance into banks’ lending decisions in Ghana.
It serves as a guide for banks to integrate the core principles of sustainability into their business operations, ultimately contributing to enhanced growth and increased returns.