Thursday, October 29, 2020

We have to remove “bad apples” from the financial sector – Bank governor

BY VICTOR BAATWENG

The central Bank Governor ÔÇô Moses Pelaelo this week made a clarion call on industry captains to take a lead in what he called a “total clean up of the financial sector”.

Opening up for the first time on the highly sensitive issue, Pelaelo said he is gravely concerned by the incipient personal greed and reported governance failures in some segments of the financial sector, which he said has the potential to erode fiduciary responsibilities and, consequently, undermine public confidence in financial markets.

“This is clarion call to all of us that ethics should be an everyday thing” – Pelaelo speaking to journalists in the capital Gaborone shortly before the signing of a Memorandum of Understanding the Non Banking between BOB, Financial Institutions Regulatory Authority (NBFIRA), the Financial Intelligence Agency (FIA) as well as their parent ministry ÔÇô Finance and Economic Development Planning on Tuesday.

He went on to say that there is need to ensure that board and management in the financial sector are of integrity. “We have to remove bad apples”

Pelaelo, who took over the high office at the central bank in 2016, said that bankers and financial professionals who have previously been “fired” for breaking ethics should not be circulated around.

“We cannot expect monkeys to look after Bananas”, Pelaelo said.

Pelaelo’s sentiments and the establishment of Financial Stability Council (the Council) comes at a time when the country continues to experience multimillion financial scandals more especially in the capital and money markets.

The new council ÔÇô which was approved by Finance Minister Kenneth Matambo in April 2018, is seen as a significant step towards facilitating collaboration, cooperation and communication amongst the four government agencies for the purpose of implementing macro prudential policy.

“The other important facet relates to national contingency planning for a financial sector crisis, anchored on proactive macro-prudential assessments, stress testing and a deeper understanding of cross-sectoral interactions of firms and financial markets”, said Pelaelo last week.

According to Pelaelo, given the nature and construct of financial intermediation and, in particular, the structure of balance sheets of banks, things will and often go wrong.

“For these reasons, the strengthening of financial sector safety nets, encompassing effective crisis management, recovery and resolution plans as well as a proposal for the establishment of a deposit insurance scheme in Botswana, will form part of the agenda of the Financial Stability Council in 2019”, Pelaelo said.

Meanwhile the central bank said it will work tirelessly to support Government actions and programmes, coordinated by the Financial Intelligence Agency, in continuing to build a robust and sustainable Anti-Money Laundering and the Combating of the Financing of Terrorism architecture for Botswana.

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