Most of the indigenous banks had been at the risk of defaulting on their loans, as they had been affected by the economic fallout of the Great Recession, which caused the events leading up to the Arab Spring that occurred in North Africa beginning in 2010.
[7] Board level and senior management were either inactive or engaged in activities that inured to their personal interests rather than to the growth of the banks.
There was also the lack of independence and integrity among Chief Internal Auditors in most of the collapsed banks, leading to cover-ups for executive directors during review processes.
[9] Non-performing loans affects the banks in the following way, amongst others: increase in operating costs, leading to decrease in profitability.
[13] Credit risk may arise in cases of inadequate income, loss in business, death, unwillingness and other reasons, on the side of the borrower.
[13] Large losses generated by defaults of borrowers or issuers of security can lead to insolvency and possibly to the bankruptcy of a bank.
[15] In its press release statement, BoG stated that ...regulatory non-compliance, and poor supervision, (questionable licensing processes and weak enforcement) lead to a significant build-up of vulnerabilities in the banking sector.
[17] Under any circumstance, the regulator is solely responsible for reading the proactive constructs of the provisions made within the laws to protect activities within the sector, in other to prevent situations of dire consequences.
[21] An observation was made that there was non-adherence to credit management principles and procedures as due to the high exposure of the bank to insiders and related parties.
[22] Samuel Okyere also noted that the loans approval process was run as a closely coupled system and did not allow for diversity and varying opinion which led to confirmation biases.