Bank of Ghana plans to reduce the salaries of Directors, CEOs of universal banks, here's why

Bank of Ghana (BoG) has disclosed that it will reduce the salaries of Managing Directors and Chief Executive Officers of universal banks in the country.

Dr Ernest Addison, Bank of Ghana Governor

The central bank said it will as well scrutinize the compensation packages of Chief Executive Officers (CEOs) and key management personnel of banks.

These, the bank said, is aimed at ensuring that the banks’ operational costs are not passed on to customers.

Close scrutiny is also expected to be applied to the remuneration of bank directors.

The Governor of the Bank of Ghana, Ernest Addison said this while reacting to a question after announcing the new policy rate on Monday, November 25, 2019.

He explained that one of the benchmarks of reducing the salaries will be the number of loans a bank has given out and collected or not collected.

"As you can see, this is a recent decision, we've looked at the operational cost of the banks, if you look at the cost of operation of the banks you will see where the inefficiencies are coming from, and we think it's about time we sit down and have a conversation to ensure that CEOs that are reporting all this high amount of ..... are not being compensated in excess in some of the results that they are achieving.

Let’s bring some equity into the system so this is early days yet, but it's an idea that we have thrown out and as part of the processes after every MPC, we have a meeting with the Ghana Association of Banks and I believe with the meeting that is on Wednesday we will go through the details of all of these with the stakeholders....."

“We will be working closely with the banks to ensure that they do not pass on their operational inefficiencies and overhead costs to their clients,” Dr Addison added.

New policy rate

Monetary Policy Committee of the Bank of Ghana (BoG) has kept the policy rate unchanged at 16 percent.

Speaking to the media at a news conference on Monday, the Governor of the Bank of Ghana, Dr Ernest Addison said the decision was a result of some threats to the country’s economic growth and inflation outlook.

Dr Addison added that threats to inflation are broadly balanced hence the need to maintain the policy rate at 16 per cent

This is the fifth time since January this year that the Bank of Ghana has kept its rate unchanged.

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