Tag: Mrs Elsie Addo Awadzi

Mrs. Elsie Addo Awadzi, the second deputy governor of the Bank of Ghana, highlighted that 3,500 jobs were preserved as a result of the Central Bank’s decision to dissolve and combine about seven failed banks to form the Consolidated Bank Ghana Ltd.

“The Government’s decision to guarantee the deposits of the seven bankrupt banks, BoG’s measures against those institutions, and the establishment of CBG have all contributed to reducing the severity of the potential negative effects of these collapses.
There are frequently many victims when banks collapse, and if they are not properly managed, this might cause serious issues for the financial system and the overall economy.

The interventions of the BoG and Ministry of Finance (MoF) minimised job losses by saving some 3,500 or 70% of approximately 5000 employees of the defunct banks,” she said.

Second Deputy Governor of the Bank of Ghana, Mrs. Elsie Addo Awadzi, has said that the bank’s intervention on collapsing and merging the seven defunct banks to form the Consolidated Bank Ghana Ltd saved some 3,500 jobs.

Some have called the central bank’s decision to collapse and merge the seven defunct banks ill-timed and disastrous, as it has led to some 1,500 job losses.

But speaking at the Joy FM Financial Sector Forum held in Accra, Mrs. Awadzi justified the central bank’s decision, saying it rather minimised the job losses by 70 percent, which otherwise would have been lost if the action was not promptly taken.

“BoG’s actions against the failed banks and Government’s decision to guarantee the deposits of the seven banks and the creation of CBG have helped to mitigate what could have been severe adverse consequences from these failures. When banks fail, there are usually a lot of casualties which, if not well managed, could lead to significant problems for the financial sector and the economy.

The interventions of the BoG and Ministry of Finance (MoF) minimised job losses by saving some 3,500 or 70% of approximately 5000 employees of the defunct banks,” she said.

See Also: Betway Ghana launches second edition of ‘Talent Search’
She added that the banking sector reforms have boosted the confidence of local and international investors and other market players, and have contributed to the recent upgrades of Ghana’s credit rating by Standards and Poors (S&P) to B- to B.

Also addressing why there was the need to take such strong action against the banks, Mrs. Awadzi said the banks posed a significant risk to the economy and had to be helped to exit the market in an orderly fashion, especially, considering the extent of distress they were in.

“Failed banks become serious sources of risk for the entire financial system and the economy as a whole, and must be made to exit before they collapse the whole system. What happens to the financial system affects everyone.

The defunct banks had reached a point where they were no longer able to operate as banks. 4 of the 7 had been found to be significantly undercapitalized as of the 2015/16, and subsequently became insolvent when their capital was further impaired due to bad loans and other irrecoverable assets.

The other 3 defunct banks obtained their licenses by false pretences through the use of suspicious and non-existent capital, which rendered them significantly undercapitalized compared to the minimum of GH¢120 million they were required to have,” she said.

See Also: Guinness grabs ultimate award at 2018 Beverage Awards
Going forward, the BoG will continue to strengthen its supervisory and regulatory role to ensure such a situation does not repeat itself.

“On our part, we are strengthening our regulatory and supervisory capacity through improved systems, processes, accountability, and training, to enable our supervision staff to better monitor banks’ performance and conduct, and ensure that banks take prompt corrective action to address emerging risks.

We are working with all stakeholders to rebuild confidence in our banking sector. There are great opportunities ahead for the industry to drive Ghana’s economic growth agenda, and we expect to see banks positioning themselves for these opportunities,” she said.

Second Deputy Governor of the Bank of Ghana (BoG), Mrs Elsie Addo Awadzi, has called on Rural and Community Banks (RCBs) to leverage growing digital technology to maintain relevance within the financial services sector.

She said commercial banks were riding on digital technology and the government’s digitisation drive to increase appeal among rural and local communities.

The Deputy Governor, who was addressing the 21st Annual CEOs Conference of the ARB Apex Bank in Ho on Friday, said the reach and acceptance of digital technology should encourage the RCB sector to re-strategise.

“Digital technology is redefining the financial landscape. Commercial banks now can reach communities cost-effectively using technology.

“That divide between what belongs to the RCB sector and the commercial banks are gone. There is no boundary in the financial market, and it’s a wake-up call for the RCB sector,” she stated.

Mrs Awadzi said customers would be forced to rethink the use of rural banks as commercial banks continued to break ground in a space that was considered exclusively for RCBs.

She said RCBs must consider digital technology an “enormous growth area,” and leverage their strengths in penetrating local communities, in seeking to revise strategies to add value to the products and services to suit customers.

“Repositioning RCBs means it’s essential to take stock of the strengths and weaknesses of the industry. Customers are driving innovation. They are asking for ways of banking that are more suitable and deliverable to their taste.

Any financial institution that has not adopted digital transformation technology is clearly behind the curve. RCBs should endear to reorganize their business modalities to remain relevant,” the Deputy Governor added.

She said the Government and its stakeholders recognised the place of RCBs within the nation’s financial security structure, and that the Ministry of Finance and the BoG would continue to support the sector to grow along the digital transformation path.

Mrs Awadzi said the Government and the World Bank would work together to strengthen the Apex Bank to scale up and revive RCBs and help enhance technology exposure for the sector.

She urged the management of the sector to “keep in mind the compliments and the risks,” and said with “strong governance, and strong risk management systems,” the risks should be mitigated.

Mrs Awadzi said RCBs would have to augment their capital base to be able to implement the appropriate systems and strategies.

She noted that several RCBs were yet to implement the BOGs 2018 cyber security strategy and that CEOs must ensure their institutions took the line.

She further said the BoG’s sustainable banking principles launched in 2019 should be embraced by RCBs, which are expected to use their lending power to promote clean and more environmentally sustainable ways of doing business.

The three-day conference was on the theme: “Positioning Rural Banking at the Center of Financial Services Delivery in Ghana- the Role of Stakeholders”, and brought together top management of the Apex Bank, the Bank of Ghana and other related financial institutions.

Alex Kwasi Awuah, Managing Director of the ARB Apex Bank, said the rural financing gap, which formed the rationale behind the establishment of the rural banking system in Ghana by the BoG, had not been addressed 50 years on.

He said it was because the sector had not embraced the tools available.

“Digitisation and growth in financial technology solutions would help fully embrace the digital revolution by delivering the right products and services to bridge this yawning gap in the rural and community banking sub-sector,” Mr Awuah said.

The Managing Director said the ARB remained confident that with its agency and digital banking systems, the sector’s needs would be met.

He said CEOs remained the guarantors of the successes of the banks and should focus on saving banks from deterioration.

He called to price products and services to help draw customers closer and to tighten controls to prevent fraudulent practices that had been rampant in the sector.

Dr Toni Aubynn, Board Chairman of the Apex Bank, challenged RCBs to “use turbulent times to seek innovative thoughts and skills to bear in withstanding global whirlwinds and be able to emerge stronger.”

Source: GNA