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Banks Face Liquidity, Credit Exposures
 
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30-Sep-2015  
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The Ghanaian banking industry may not be entirely sound or solid as always captured by the Financial Stability Report by the Bank of Ghana.

Information gathered by The Finder suggests that a number of banks are facing liquidity, interest rates and credit risks exposure.

The situation, if not checked, could have serious implications for the economy.

This comes at a time when the Bank of Ghana has contracted an accounting firm to conduct special audit into the balance sheets of all the 28 licensed banks in Ghana on the orders of the International Monetary Fund (IMF).  

This paper has learnt that most of the financial intermediaries hit by the aforementioned risks exposure are mainly in tier-two, -three and -four categories.

Tier-one banks are banks with huge capital with strong balance sheet and presence, followed by tier-two, tier-three and tier-four banks. 

Though these risks exposure is created by the banks’ own doing, the unstable Ghanaian economy has been a major concern to the players.  

Two of the banks, according to information picked from some renowned auditing firms, are tier-two or second quartile banks. They are said to be facing high liquidity and interest rate risks. 

Two of the banks in tier-four category are alleged to have diverted funds into other business while two others are in the tier-three category. 

However, some tier-four banks and most of the tier-one banks are said to be doing well with strict operational and credit risk scrutiny.

The special diagnostic audit report, which is being conducted by international accounting firm KPMG with support from PricewaterhouseCoopers (PwC), will review banks’ assets classification and valuation, provisioning and restructuring practices. 

It will help to determine whether there should be a revision of loans classification and provisioning practices that will be needed and new requirements introduced to rectify any potential provisioning shortfalls or prudential non-compliance.  

The structural liquidity of the banking system has changed from excess liquidity to liquidity shortage over the past year. 

Meanwhile, some banks are alleged to be highly involved in money laundering, with most of them being foreign-owned banks. 

For instance, a tier-two international bank was recently alleged to have been involved in money laundering from suspicious offshore accounts.  

This has raised concerns about the strict regulatory regime by the Bank of Ghana's supervisory department.

This paper gathered that most of the punitive measures applied by the Bank of Ghana on some of the banks are concealed from the public. 

Ghana was recently ranked 66th among 152 countries in the world ranking of countries with high risk rating of money laundering and terrorism financing.

It, however, did better than countries like Nigeria, Ivory Coast and Burkina Faso, which are considered high risks in money laundering and terrorism financing. 

South Africa was, however, the number one country in Africa with a lower risk in money laundering and terrorism financing. 
 
 
 
Source: The Finder
 
 

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