- 10 Marks
CSEG – May 2019 – L2 – Q4a – Corporate governance framework
Discuss how inadequate corporate governance contributed to the financial distress in the Ghanaian banking sector.
Question
The banking sector in Ghana has witnessed the withdrawal of licenses of seven indigenous commercial banks by the Bank of Ghana. These banks were in serious financial distress that they had to be taken over by another bank. UT Bank and Capital Bank were taken over by the GCB Bank in 2017 because they were in serious financial distress. The Bank of Ghana in August 2018 created the Consolidated Bank Ghana Limited to take over Unibank, Beige Bank, Sovereign Bank, The Royal Bank, and Construction Bank for similar reasons.
Different views about who or what was to blame for the crisis have been advanced, but many commentators agree that senior bankers and the Bank of Ghana had failed to recognize the early signs or ignored the indicators until it was too late. When companies collapse, there is often evidence of poor corporate governance.
Required:
Discuss FOUR (4) ways in which the difficulties faced by these banks may have been attributable to weak or inadequate corporate governance systems.
Find Related Questions by Tags, levels, etc.
- Tags: Banking Sector, Corporate Governance, Financial Distress, Ghana, Governance Failures
- Level: Level 2
- Topic: Corporate governance framework
- Series: MAY 2019