Cal Bank MD Cautions BoG Over Risk Appetite of Banks

Mr. Frank Adu Jnr, Cal Bank CEO

Mr. Frank Brako Adu Jnr, the Managing Director of indigenous financial service provider, Cal Bank, has admonished the regulator of the banking sector, to be cautious of the risk appetite of banks in the country.

His admonishment comes at the back of recent sector reforms by the Bank of Ghana (BoG), which led to the reduction of universal banks to 23.

As part of the sector reforms, the Central bank undertook a recapitalization exercise, which required banks to have a minimum capital requirement of GHC 400 million.

The recapitalization exercise saw local firms, Captial and UT bank, which the BoG described to have been deeply insolvent, collapsed and taken over by state owned GCB Bank. Consequently, the regulator approved for GN Bank to operate as a savings and loans company.

Meanwhile, in addition to the state-owned banks (ADB, NIB), merged Omni/Bank Sahel Sahara, Universal Merchant Bank, and Prudential Bank were selected to benefit from the
the Ghana Amalgamated Trust (GAT) scheme, on the basis of their solvent status and good corporate governance.

The Cal Bank MD has since lauded the central bank for the reduction, saying, “the reduction in the numbers, first step is good, because the banks now become smaller and then it makes them stronger.”

However, Mr. Adu Jnr, who will be retiring at the end of 2019 at age 57, quickly cautioned the governor over the risk appetite of the 23 remaining banks in the country.

He explained that, “the number 400 will be adequate today but based on the risk you go and take, you will easily become inadequate.”

“The central bank will now have to watch the risk appetite of the various banks, that is where I think the challenge is, because, we also have a high default culture in this country,” he stressed.

He made this caution statement when he was hosted on TV3’s monthly business oriented program, Time with the Captains, on Monday, May 27, 2019.

The program which was aired live on the station afforded students of the Ghana Institute of Journalism (GIJ), University of Ghana Business School (UGBS) and GH Media School, the opportunity to interact with the Managing Director of Cal Bank.



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