The Bank of Ghana (BOG) has issued a final Large Exposures Directive for banks, savings and loans companies, finance houses and financial holding companies, alongside explanatory notes setting out key changes made following consultation. The framework is intended to limit concentration risk, act as a backstop to risk-based capital requirements, and align supervisory expectations with Basel Committee large exposure standards. A “large exposure” is defined as a counterparty or connected group exposure of at least 10% of net own funds, with non-exempt exposures capped at 20% of net own funds for banks and financial holding companies and 15% for savings and loans companies and finance houses. The Directive also limits aggregate non-exempt large exposures to six times net own funds for banks and financial holding companies and four times for savings and loans companies and finance houses, sets specific limits for related-party exposures, requires robust identification and reporting processes for connected counterparties, and applies exposure measurement across on- and off-balance sheet items in both the banking and trading books with limited recognition of credit risk mitigation. Exemptions include certain sovereign and central bank exposures, intraday and specified short-term interbank exposures, and clearing exposures to qualifying central counterparties, but exempt exposures meeting the large exposure definition must still be reported; monthly reporting templates cover all exposures at or above 10% of net own funds and each institution’s top 100 exposures, and limit breaches must be reported within five days with a written remediation plan. The effective implementation date is 1 January 2027, revised from the exposure draft, and the timeframe to become fully compliant has been extended to one year. Regulated financial institutions must conduct impact assessments and submit a credible board-approved plan acceptable to the BOG by 31 December 2025 setting out how compliance will be achieved within the permitted timeframe.
Bank of Ghana 2025-09-01
Bank of Ghana issues Large Exposures Directive setting 20% and 15% net own funds caps effective January 2027
The Bank of Ghana has issued a final Large Exposures Directive for banks and financial institutions to limit concentration risk and align with Basel Committee standards. The directive defines large exposures and sets caps on non-exempt exposures, with specific limits for related-party exposures and aggregate exposures. Institutions must submit compliance plans by 31 December 2025, with full implementation required by 1 January 2027.