Governor of the Bank of Ghana, Dr. Johnson Asiama, has reaffirmed the central bank’s commitment to maintaining a strong and trustworthy financial system, warning that banks and specialized deposit-taking institutions showing signs of weakness or engaging in unsafe practices will face firm regulatory action.
Dr. Asiama explained that a core objective of the Bank is to ensure the safety and soundness of all financial institutions through strict supervision and timely intervention. This responsibility, he said, includes supporting distressed banks through corporate restructuring to restore efficiency, reduce debt, and protect depositors’ funds.
However, the Governor emphasized that where a financial institution becomes insolvent or poses a risk to the sector, the Bank of Ghana will act decisively to safeguard stability and public confidence.
“The Bank of Ghana’s duty is first to the safety of Ghana’s financial system,” Dr. Asiama stated. “We will not allow any institution that threatens this stability, whether through poor governance, risky practices, or financial misreporting, to continue unchecked. The law empowers us to act, and we will do so without hesitation.”
He referenced Sections 107 and 123 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), which give the central bank authority to place a failing institution under administration or receivership when there is no feasible path to recovery.
Dr. Asiama noted that while such actions are not taken lightly, they are necessary to prevent systemic risk and protect the broader economy.
The Governor further outlined some of the major causes that could lead a financial institution into insolvency. These include creative accounting practices that misrepresent financial conditions, cash and asset suppression, and insider dealings or related-party transactions that exceed statutory limits. Other causes are weak board oversight, overriding of internal controls, non-compliance with Bank of Ghana provisioning norms, and failure to implement regulatory recommendations.
He also mentioned issues such as inadequate capital, non-existent paid-up capital, or investments in unapproved institutions, high management fees paid to related parties, excessive risk-taking without proper risk management, poor investment decisions, and lack of due diligence.
Additional warning signs include the misuse of depositors’ funds for long-term expenditures leading to asset-liability mismatches, poor credit underwriting standards resulting in non-performing loans, and the use of depositors’ funds to finance related-party projects.
His comments come at a time when memories of Ghana’s banking sector clean-up remain fresh. Between 2017 and 2020, several financial institutions that appeared sound on paper were later found to be insolvent, poorly managed, and burdened with hidden losses and insider transactions. Many had published healthy financial statements that masked their true condition.
The Bank of Ghana’s intervention during that period led to the revocation of several licences and the merger of others to restore stability. Though the exercise came at significant fiscal cost, it helped rebuild public confidence and strengthen the resilience of the financial sector.
Dr. Asiama’s latest remarks indicate that the central bank will continue to uphold strong regulatory oversight to prevent a recurrence of those challenges. He reminded banks to maintain the required capital adequacy ratios and comply fully with prudential guidelines or face sanctions, including possible receivership.
“We want every institution to know that transparency, strong governance, and responsible banking practices are not optional. These are the foundations of a healthy financial system,” he said.
