The Managing Director of First Bank Ghana, Victor Yaw Asante, has highlighted the bank’s strategic approach to mitigating risks associated with Ghana’s Domestic Debt Exchange Programme (DDEP), ensuring its financial stability amid widespread industry challenges.
He was on Joy News’ PM Express Business Edition on Thursday, February 27.
Asante explained that First Bank Ghana’s adherence to strict risk management policies played a crucial role in protecting it from significant financial setbacks.
Unlike many financial institutions that suffered liquidity constraints due to heavy exposure to government bonds, First Bank Ghana remained cautious.
“We stuck to our risk portfolio and guidelines,” Asante stated. “So when there’s a problem in any particular area, you are still capped.”
He acknowledged that while the temptation to invest in government securities was strong, the bank deliberately avoided over-reliance on them.
“Even though it became easier to buy government bonds, we didn’t give in to that temptation at all,” he emphasized.
Asante admitted that when the DDEP was introduced, the financial sector experienced significant turmoil, with several banks struggling to recover.
“In the last two or three years, when it started, we had the least exposure. Some banks, however, had significant exposure, which led to major challenges,” he explained.
He added that the first year of implementation was particularly tough, forcing many banks to take drastic measures to mitigate their losses.
Following the initial setbacks, some banks began to write back previously withheld assets, leading to an apparent improvement in financial performance. However, Asante cautioned against mistaking these recoveries for fundamental financial strength.
“I think after last year, some banks were able to write back assets they had initially withheld due to uncertainty. That contributed to the strong financial performances we are seeing,” he noted.
“But if you strip off extraordinary items and focus on core operations, then you get a clearer picture of financial health.”
Asante reiterated the importance of disciplined financial management, particularly in an unpredictable economic climate.
“What you see in some banks’ performances is a reflection of them putting back something they didn’t recognize earlier. As a bank, you have to do that,” he stated.
He concluded that while First Bank Ghana’s approach helped shield it from the worst effects of the debt crisis, the overall financial sector must remain vigilant and prioritize prudent risk management to sustain long-term stability.
