The Governor of the Bank of Ghana (BoG), Dr. Ernest Addison, has urged commercial banks to tackle the structural weaknesses undermining the stability of the banking sector.
Dr. Addison emphasized the need for a comprehensive approach to address these vulnerabilities.
He spoke at the 28th National Banking and Ethics Conference on Thursday, November 21 which was organized by the Chartered Institute of Bankers, Ghana.
He revealed that the Central Bank is incorporating Business Model Analysis (BMA) into its supervisory framework to identify risks that could threaten the sector’s long-term stability. This proactive strategy is designed to detect vulnerabilities early and prevent unsustainable practices.
Dr. Addison highlighted that banks’ weaknesses often stem from flawed business models and strategies rather than sudden external shocks. “Weaknesses leading to the collapse of banks do not happen overnight. Unviable and unsustainable business models and strategies are often the root causes of vulnerabilities and failures. While external shocks like COVID-19 or the global financial crisis can exacerbate these challenges, the underlying issues are typically structural. If not addressed early, they can render banks unsustainable and non-viable,” he noted.
He further stated that the BoG has issued an exposure draft of its methodology for assessing the viability of banks’ business models, which will soon be finalized and adopted. “Business model analysis has the potential to enhance bank supervision, making it more effective, proactive, and forward-looking. This will be our next thematic review in the coming year,” Dr. Addison added.
The Governor also stressed the importance of responsible banking practices rooted in strong ethical standards, urging the industry to prioritize integrity and accountability.
Meanwhile, Benjamin Amenumey, President of the Chartered Institute of Bankers, Ghana, called for stronger internal controls to combat the rising levels of financial fraud in the sector. Citing the 2023 Fraud Report by the Bank of Ghana, he noted the urgent need for ethical training and robust mechanisms to safeguard the industry.
“The rise in financial fraud underscores the critical need for enhanced internal controls and ethical training to ensure the sector’s resilience,” Amenumey stated.
The conference served as a platform to address key challenges in the banking sector while reinforcing the importance of ethical and sustainable practices in fostering a resilient financial system.
