Subject: CORPORATE GOVERNANCE

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CG – L4 – Q5 – ESG Issues in Development Banks

Identify and examine five main ESG issues for a development bank's board in meeting regulatory reporting and disclosure.

Question

Environmental, Social and Governance (ESG) issues have become central to many board decisions in banks. Critically examine the FIVE main issues the Board of Directors of a Development Bank should consider in satisfying regulatory reporting and disclosure requirements.

(25 marks)

Answer

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Tags: Board Decisions, Development Banks, Disclosure Requirements, ESG Issues, Regulatory Reporting
Level: Level 4

Topic: Triple Bottom Line
Series: OCT 2022

CG – L4 – Q4 – Company Secretary as Chief Governance Officer

Analyze the perspective that the Company Secretary should serve as the Bank's Chief Governance Officer.

Question

Critically examine the current view in corporate governance that the Company Secretary should be designated as the Chief Governance Officer (CGO) of the Bank.

(25 marks)

Answer

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Tags: Bank Governance, Chief Governance Officer, Company Secretary, Corporate Governance Views
Level: Level 4

Topic: Role of Management
Series: OCT 2022

CG – L4 – Q3 – Tenure of Office for Board and CEOs

Examine the practical significance of regulated tenures for bank board chairs, members, and CEOs

Question

Critically examine the practical importance of the approved tenure of office of the Board Chairpersons, Board Members and the Chief Executive Officers (CEOs) of Banks. (25 marks)

Answer

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Tags: Board Chairpersons, Board Members, CEOs, Practical Importance, Tenure Limits
Level: Level 4

Topic: Ethical Perspectives
Series: OCT 2022

CG – L4 – Q2 – Internal Board Evaluation

Discuss the importance of conducting an Internal Board Evaluation and outline five key elements to include.

Question

Critically examine the importance of a board conducting an Internal Board Evaluation (IBE) and the FIVE key elements that should be included in the evaluation.

(25 marks)

Answer

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Tags: Board Effectiveness, Evaluation Elements, Internal Board Evaluation, Regulatory Compliance
Level: Level 4

Topic: Board/Management Responsibility for Bank Performance
Series: OCT 2022

CG – Level 4 – Q1 – Effectiveness of Business Model and Governance Mechanisms

Analyze the effectiveness of Daily Bank Plc's business model based on the given financial excerpts and scenario, and propose five key corporate governance mechanisms for future effectiveness.

Question

The Daily Bank Plc (Sikaman) is a subsidiary of the Daily Bank Plc. Sikaman depends largely on agricultural and other primary exports for its foreign exchange earnings. The Chairman of Daily Bank Plc (Sikaman), Dr. Frank Owusu has received the revised end of the third quarter financial performance of the Bank from the Chairperson of the Audit Committee, Mrs. Mary Adobea. He has invited the Chairman of the Risk Committee, Dr. Kofi Roomy to assist in the discussion concerning the financial performance before the entire board meets. The Chairman’s attention has been drawn to the following excerpts from the unaudited comprehensive income statement as at 30th September, 2022 by the Director of Finance who is also expected to be in attendance. The excerpts are presented below. The Chairman of the Board has also asked the other Chairpersons to consider a recent internal memo from the group that instructed the Management Team to exit from the bond market, but it appeared to have been a missed strategic decision and opportunity because it has been received at the time the market is illiquid. This has created some degree of accountability challenge at the Board level. The Chairman has continued to question, why the board could not call for a shift in the allocation of resources on their own evolution but had to be prompted by the Group’s Board. Summary unaudited statement of Comprehensive Income of Daily Bank Plc. For the third quarter, for the year ended 30th September, 2022.

Items	September 2022 Amount in millions of cedis (GHS’000s)	September 2021 Amount in millions of cedis (GHS’000s)
Profit for the Period	280,000	300,000
Other Comprehensive Income
Items that will not be reclassified to profit or loss
Expected credit loss on investment securities at fair value other comprehensive income (FVOCI)	(300)	200
Change in fair value of financial assets at FVOCI (net of tax)	(200,000)	40,000
Other Comprehensive income for the period net of tax	(230,000)	40,200
Total Comprehensive Income	50,000	340,200

Source: Daily Bank Plc. www.db.sikaman
The Board of Daily Bank Plc (Sikaman) intends to refocus on the business model and the strategy being implemented by the bank. The business model statement recently approved by the Board in the previous annual report was accepted by most of the shareholders and stakeholders present at the latest annual general meeting (AGM). The current financial performance has put the Chairman of the Board on inquiry and is not convinced about the quality of the governance mechanisms in place. These mechanisms are required to protect the bank by minimising potential losses that can potentially occur due to being slow to react to global, environmental and political risks in Sikaman.
Required:
(i) Critically examine effectiveness of the business model of Daily Bank Plc. (35 marks)
(ii) Critically examine the FIVE key corporate governance mechanisms that the Board should introduce to be effective in future. (15 marks)

Answer

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Topic: Board Responsibility for Bank Performance
Series: OCT 2022

CG – APR 2023 – L4 – Q5 – Application of Transaction Cost Theory to Digital Product Approval

Examine application of Transaction Cost Theory in board approval of a digital product.

Question

The Board of Kashbank Plc has been introduced to the various bank corporate governance theories as part of its board development programme organised by the accounting firm Bash. The Directors are interested in the Transaction Cost (TC) Theory and want to understand how they should apply transaction cost issues to their decision to approve the the introduction of a digital product called MoneyTalks.

REQUIRED

Critically examine how the Board of Kashbank should apply the Transaction Cost (TC) Theory in approving the digital product, MoneyTalks to be introduced to customers.

(25 marks)

Answer

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Tags: Board Approval, Corporate Governance Theories, Digital Product, Fintech Introduction, MoneyTalks, TC Theory, Transaction Cost Theory
Level: Level 4

Topic: Payment Systems and Services Act
Series: APR 2023

CG – APR 2023 – L4 – Q4 – Management of Country and Sovereign Risk

Examine measures for the Risk Committee to manage country and sovereign risk.

Question

Country and sovereign risk has become central to governance decisions in banks and accountabilities of both the Audit and Risk Committees of boards of banks. Critically examine the FIVE measures the Risk Committee of the Board should institutionalise to satisfy the expectations of the Board in their management of country and sovereign risk.

(25 marks)

Answer

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Tags: Audit Committee, Board Expectations, Country Risk, Governance Decisions, Risk Committee, Risk Management Measures, Sovereign Risk
Level: Level 4

Topic: Basel Recommendations
Series: APR 2023

CG – APR 2023 – L4 – Q3 – Governance Framework for Responsible Banking

Examine governance framework for enforcing responsible banking in a recovering bank.

Question

Responsible Banking is central to strategies of banks recovering from financially distressed economies and financial sectors. Critically examine the governance framework that the Board of Goodbank Plc in Ashland should institutionalise to enforce responsible banking practices.

(25 marks)

Answer

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Tags: Board Institutionalization, ESG, Ethical Practices, Financially Distressed Economies, Governance Framework, Responsible Banking
Level: Level 4

Topic: Sustainable Banking Principles
Series: APR 2023

CG – APR 2023 – L4 – Q2 – Role of Remuneration Committee under Basel III

Examine responsibilities of the Remuneration Committee to enhance its TOR for Basel III compliance.

Question

The Board of Light Bank Plc intends to review the role of the Remuneration Committee to satisfy the requirements of Basel III. Pillar III requirement on disclosures. The Board has engaged you as a Corporate Governance Consultant. You are satisfied from an initial assessment of the committee’s terms of reference (TOR) that it covers areas such as role, constitution, membership, proceedings of meetings, reporting and disclosure, governance and resources, and terms of reference. You observe that the section on responsibilities does not reflect the strategic objectives of the bank.

REQUIRED

Critically examine the main responsibilities (tasks/ functions) of the Remuneration Committee to assist the board of Light Bank Plc to have a comprehensive Terms of Reference (TOR) for the Committee. (25 marks)

Answer

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Tags: Bank Board, Basel III, Pillar III Disclosures, Remuneration Committee, Strategic Objectives, Terms of Reference, TOR
Level: Level 4

Topic: Board Constitution
Series: APR 2023

CG – APR 2023 – L4 – Q1 – Impact of DDEP on Bank Governance and Capital Restoration Programme

Examine measures and procedures for capital restoration in a bank affected by DDEP, focusing on governance aspects.

Question

The Board of Goldbank Plc in Sikaman has observed that the recent Domestic Debt Exchange Programme (DDEP) has negatively affected the governance and decisions of the bank. The Board is particularly concerned about the impact it is having on its governance performance standards and structures.

A major observation is the impact of the DDEP on the balance sheet or statement of position of the bank. The DDEP has resulted in a significant reduction of the Common Equity Tier 1 (CET1) capital of the bank. The situation also suggests that the strategic corporate governance objective of securing or protecting shareholders’ assets has been undermined. You are aware of some regulatory forbearances including a period of capital restoration and restructuring deployed by the regulator. It appears many of the governance indices set for bank corporate governance control and monitoring have been breached, or do not seem to have any governance interpretation for decision-making.

The Board of Goldbank intends to engage you as a corporate governance consultant to help it to establish the full impact of the programme on the bank’s governance structures and mechanisms.

The Chairperson, Dr. Rita Agyei is particularly interested in the aspects that relate to the Capital Restoration Programme.

REQUIRED

(i) Critically examine the FIVE main corporate governance measures that should be taken by the Board towards its Capital Restoration Programme (CRP). (35 Marks)

(ii) Examine the governance procedures that should be implemented to co-ordinate the capital restoration programme in Goldbank Plc. (15 Marks)

(TOTAL. 50 MARKS)

Answer

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Tags: Bank of Ghana, BoG, Capital Adequacy, Capital Restoration Programme, CET1, Common Equity Tier 1, CRP, DDEP, Domestic Debt Exchange Programme, Governance Structures, Regulatory Forbearances
Level: Level 4

Topic: ETHICAL PERSPECTIVES OF CORPORATE GOVERNANCE
Series: APR 2023

CG – APR 2024 – L4 – Q6 – Role Expansion of Chief Governance Officer in Capital Planning

Discuss whether the evolving role of the Company Secretary to Chief Governance Officer should include capital planning in situations of stressed bank balance sheets.

Question

The changing role of the Company Secretary to become the Chief Governance Officer (CGO) means that in situations of stressed Balance Sheet or Statement of Position of banks, the role of the CGO should be expanded to include Capital Planning. Discuss.

(20 marks)

Answer

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Tags: Bank Distress, Capital Planning, Chief Governance Officer, Company Secretary, Regulatory Framework, Risk Management, Stressed Balance Sheet
Level: Level 4

Topic: Regulation and Bank Distress
Series: APR 2024

CG – APR 2024 – L4 – Q5 – Conduct and Reputation Risks Management

As Corporate Governance Advisor, state and explain essential areas of conduct and reputation risks for the board to consider, and outline practical information for managing them.

Question

The Board of Directors of a bank is very concerned about the conduct and reputation risks that it manages. The bank has recently appointed you as the Corporate Governance Advisor (CGA) to the Board.

i) State and explain the essential areas of conduct and reputation risks the Board should consider.

(10 marks)

ii) Outline and discuss the practical information the Board should use to manage conduct and reputation risks related issues in the bank.

(10 marks)

[Total: 20 marks]

Answer

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Tags: Board Responsibilities, Compliance Management, Conduct Risks, Ethical Leadership, Fiduciary Duties, Reputation Risks, Risk Mitigation
Level: Level 4

Topic: Objectives; Integrating Compliance into External Stakeholder
Series: APR 2024

CG – APR 2024 – L4 – Q4 – Greenium in Pricing Policy and Competitiveness

The board of Rosebank lost a potential corporate banking account because its pricing policy did not include "greenium"; critically assess practical steps the board should take to remain competitive.

Question

The Board of Rosebank has been informed that the bank’s Corporate Banking business proposal to have the main business account of a firm that the Chairperson Dr. Mary Daniels serves on its Board, has not been successful. Dr. Mary has just been prompted that the main reason for the unsuccessful attempt was that in the proposal, the bank’s Pricing Policy did not provide for “greenium”. Critically assess the practical steps the Board of Rosebank should take to stay competitive.

(20 marks)

Answer

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Tags: Board Responsibilities, Competitiveness, ESG Integration, Greenium, Pricing Policy, Regulatory Compliance, Sustainable Finance
Level: Level 4

CG – APR 2024 – L4 – Q3 – Model Risk Management in Banking

Examine measures for the board to implement for effective governance of model risks when modeling outcomes deviate from actual results in a bank.

Question

The Chairman of the Risk Committee of Diamond Bank has observed that the Modelling of Risks, facing the bank has not provided the expected outcomes compared to the actual results being reported by the Finance Division. Examine measures the Board should implement to effectively govern the Model Risks facing the bank.

(20 marks)

Answer

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Tags: Board Measures, Effective Governance, Finance Division Discrepancies, Model Risk, Risk Modelling
Level: Level 4

Topic: Model Risk into Governance
Series: APR 2024

CG – APR 2024 – L4 – Q2 – Corporate Governance Issues in Asset-Liability Duration Mismatch

Critically examine corporate governance issues raised by asset duration being double that of liabilities amid rising inflation and interest rates in a bank.

Question

In Aqualand, the level of Inflation and Interest Rates continue to increase. The members of the Board of Aqualand Bank, Limited in their recent review of the bank’s Strategic Plan submitted by the Executive Team have concluded that the duration of the bank’s Assets is almost twice or double that of the Liabilities. Critically examine the main Corporate Governance issues the members of the Board should credibly raise with the Executive Team of the bank.

(20 marks)

Answer

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Tags: Asset-Liability Management, Bank of Ghana Guidelines, Board oversight, Inflation, Interest rates, Strategic Planning
Level: Level 4

Topic: Economic Conditions
Series: APR 2024

CG – APR 2024 – L4 – Q1 – Undercapitalisation Effects on Corporate Governance and Recapitalisation Measures

Examine how undercapitalisation impacts corporate governance in a Ghanaian bank and assess practical recapitalisation measures to achieve high-performing status.

Question

The Board of Virtualbank Plc in Sikaman, has recently approved the mid-year Unaudited Financial Statement of the bank. The bank’s Capital Adequacy remains negative as the Credit Risk Reserve (CRR) exceeds the Paid-Up Capital and Statutory Reserves remains negative. Profit After Tax (PAT) remains negative because the negative Other Comprehensive Income (OCI) has also increased as compared to the previous quarters.

The situation suggests that the Capital of the bank must be restored and the Statement of Position (Balance Sheet) resstructured. You are aware of some regulatory forbearances including a period of four (4) years for Capital Resolution and Restruturing which have been sanctioned by the regulator. A comparative analysis of banks in Virtualbank’s Strategic Group, shows that its main strengths depend on some concentrated key customers, the spread of its physical branches and its newly segment-based Digital Channels for Corporate and Small and Medium Sized Enterprises (SMEs).

The Chairperson . Dr. Nathalie Abs-Oesi is particularly interested in how the current situation has affected the Corporate Governance of the bank.

REQUIRED:

(i) Critically examine how undercapitalization could affect the Corporate Governance of Virtualbank Limited. (30 marks)

(ii) Critically assess the practical measures the Virtualbank Board can undertake to recapitalise the bank and achieve a high performing status. (10 marks)

Answer

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Tags: Bank of Ghana Directives, Board oversight, Capital Adequacy Ratio, Corporate Governance, Recapitalisation, Undercapitalisation
Level: Level 4

Topic: Financial Reporting and Disclosures
Series: APR 2024

Subject: CORPORATE GOVERNANCE

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CG – L4 – Q5 – ESG Issues in Development Banks

Identify and examine five main ESG issues for a development bank's board in meeting regulatory reporting and disclosure.

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CG – L4 – Q4 – Company Secretary as Chief Governance Officer

Analyze the perspective that the Company Secretary should serve as the Bank's Chief Governance Officer.

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CG – L4 – Q3 – Tenure of Office for Board and CEOs

Examine the practical significance of regulated tenures for bank board chairs, members, and CEOs

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CG – L4 – Q2 – Internal Board Evaluation

Discuss the importance of conducting an Internal Board Evaluation and outline five key elements to include.

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CG – Level 4 – Q1 – Effectiveness of Business Model and Governance Mechanisms

Analyze the effectiveness of Daily Bank Plc's business model based on the given financial excerpts and scenario, and propose five key corporate governance mechanisms for future effectiveness.

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CG – APR 2023 – L4 – Q5 – Application of Transaction Cost Theory to Digital Product Approval

Examine application of Transaction Cost Theory in board approval of a digital product.

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CG – APR 2023 – L4 – Q4 – Management of Country and Sovereign Risk

Examine measures for the Risk Committee to manage country and sovereign risk.

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CG – APR 2023 – L4 – Q3 – Governance Framework for Responsible Banking

Examine governance framework for enforcing responsible banking in a recovering bank.

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CG – APR 2023 – L4 – Q2 – Role of Remuneration Committee under Basel III

Examine responsibilities of the Remuneration Committee to enhance its TOR for Basel III compliance.

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CG – APR 2023 – L4 – Q1 – Impact of DDEP on Bank Governance and Capital Restoration Programme

Examine measures and procedures for capital restoration in a bank affected by DDEP, focusing on governance aspects.

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CG – APR 2024 – L4 – Q6 – Role Expansion of Chief Governance Officer in Capital Planning

Discuss whether the evolving role of the Company Secretary to Chief Governance Officer should include capital planning in situations of stressed bank balance sheets.

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CG – APR 2024 – L4 – Q5 – Conduct and Reputation Risks Management

As Corporate Governance Advisor, state and explain essential areas of conduct and reputation risks for the board to consider, and outline practical information for managing them.

You're reporting an error for "CG – APR 2024 – L4 – Q5 – Conduct and Reputation Risks Management"

CG – APR 2024 – L4 – Q4 – Greenium in Pricing Policy and Competitiveness

The board of Rosebank lost a potential corporate banking account because its pricing policy did not include "greenium"; critically assess practical steps the board should take to remain competitive.

You're reporting an error for "CG – APR 2024 – L4 – Q4 – Greenium in Pricing Policy and Competitiveness"

CG – APR 2024 – L4 – Q3 – Model Risk Management in Banking

Examine measures for the board to implement for effective governance of model risks when modeling outcomes deviate from actual results in a bank.

You're reporting an error for "CG – APR 2024 – L4 – Q3 – Model Risk Management in Banking"

CG – APR 2024 – L4 – Q2 – Corporate Governance Issues in Asset-Liability Duration Mismatch

Critically examine corporate governance issues raised by asset duration being double that of liabilities amid rising inflation and interest rates in a bank.

You're reporting an error for "CG – APR 2024 – L4 – Q2 – Corporate Governance Issues in Asset-Liability Duration Mismatch"

CG – APR 2024 – L4 – Q1 – Undercapitalisation Effects on Corporate Governance and Recapitalisation Measures

Examine how undercapitalisation impacts corporate governance in a Ghanaian bank and assess practical recapitalisation measures to achieve high-performing status.

You're reporting an error for "CG – APR 2024 – L4 – Q1 – Undercapitalisation Effects on Corporate Governance and Recapitalisation Measures"

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