Thursday, December 3, 2020

BoB imposes selection criteria for local banks’ board of directors

The central bank has released a directive to all the banks under its supervision barring them from appointing politically exposed persons to sit in their boards of directors. The directive, a copy of which was passed to Sunday Standard, said politically exposed persons would include, but is not limited to, elected officials at national or parliament level, cabinet and council or local authority level.

In the directive, which the central bank said was meant to announce revised requirements for board membership in licensed banks; sitting board members of oversight authorities are also barred from election into board of banks. Partners and senior auditors of public accounting firms are also barred from sitting on the boards of local banks. However, BoB said the circular excludes employees or lecturers of the University of Botswana, Botswana International University of Science and Technology (BIUST), Botswana National Productivity Centre (BNPC), Botswana Bureau of Standards (BOBS) and similar tertiary institutions.

Sunday Standard is also informed that the directive will affect government officials, employees and board members of parastatals entities where government is either an associate, related entity or parent with percentage of shareholding of 20, 21-50 and 51 percent respectively. It is not yet clear how the latest directive will affect operations and profits of local banks, which have of late been cashing in on the open market arrangement of the domestic economy. Financial markets on Friday indicated that the decision will likely not to dent the banks’ escalating profits, but will have a huge bearing on the decision making process as most banks could revert to appointing foreigners to their boards. Available figures show that the country’s top four listed banks have been recording positive financial results even during the 2008 recession period.

Standard Chartered Bank broke through the P1 billion mark in its 2013 full year financial results while its bulging loan book currently sits at around P6.2 billion. For the 2013 full year, FNBB recorded a little over P700 million in profits while its loan book was perked over P11 billion.

Another top performer, Barclays Bank, has a P3.2 billion market capitalisation. Banc ABC, a relative new comer in the local market, has also experienced impressive growth and its market value stands at P1.3 billion. Banc ABC’s profits for the full year ended 31st December grew by 49 percent to P189 million. Another top performer is Stanbic Bank, whose financials are not publicly known as it is not listed in the Botswana Stock Exchange.

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The Telegraph December 2

Digital edition of The Telegraph, December 2, 2020.