Mr Vish Ashiagbor, Country Senior Partner of PwC Ghana, said the call on banks to shift from the current capital measurement framework to a risk-based capital requirement on Basel II and III pillars, is designed to strengthen the banking industry.
Speaking to the press after an Executive Breakfast Symposium to share insight on Basel from other territories in Africa regarding the strategic and practical implications of Basel implementation, Mr Ashiagbor said the idea was to enable the banks to better manage external or local risk.
The symposium, which was facilitated by Mr Irwin Lim-Ah Tock, Banking and Capital Markets Regulatory Practice Leader PwC South Africa, also aimed to explore the components of regulatory change on banks and consider from a strategic view point subjects such as Internal Capital Adequacy Assessments.
The Bank of Ghana’s Capital Requirement Directive (CRD), the primary rule book for Basel II & III became effective from January 1, 2018.
The Basel Accord is a set of banking regulations put forth by the Basel Committee on bank supervision, which regulates finance and banking internationally.
Basel II attempts to integrate Basel capital standards with national regulations, by setting the minimum capital requirements of financial institutions with the goal of ensuring capital adequacy of banks.
Basel II introduces operational risk considering that many failures and difficulties experienced by banks in history were not only attributable to credit and market risks but largely to operational risk.
The Ghanaian banks are to start reporting on Basel II principles from July this year.
Mr Ashiagbor said like all processes there was the need to start at a point and refined as the banks go forward with implementation as it has become important giving the fact that the banking business is an international one.
“I think that we may not be 100 per cent ready but we should start and refined as we go along,” he said.
“Obviously the regulator would be encouraged to improve as the returns come in as they do their supervisory checks they would see where there are some gaps and encourage the banks to fix those as quickly as possible,” he said.
Mr Ashiagbor said customers and clients should be interested in the development because it speaks to the strength and the capacity of the bank that they were dealing with.
“As a depositor or client you’re interested in the banks capacity to provide services to you on a long-term basis. So some of these initiatives are designed to strengthen the banks,” he said.