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Welcome to another week of Financial learning. For the last two weeks, we have been looking at what we mean when we say one need to save and invest. We also looked at the first component to examine when you decide to invest your hard earned money which is the return or yield on your investment.

Today we will be looking at the second component, which is the Safety of your investment.

Safety is this context will cover the institution for your investment. In Ghana, there are two main classes of institutions that one can place his or her investment.

The Bank of Ghana (BoG), the regulators of our financial space have classified institutions into 2 main groups.

Class 1 and 2 financial institutions.

Class 1 institutions are made up on commercial banks who have BoG themselves as the direct supervisors. These institutions keep 10% of their deposit base with the central bank at no interest. This serves as an insurance and immediate fallback to depositors.

There is strict monitoring on their activities. As at August 2018, there were 29 licensed commercial banks in Ghana.

For the avoidance of doubt, these standing Class 1 institutions in Ghana are:

  1. Access Bank Ghana Limited
  2. ADB Bank
  3. Bank of Baroda Ghana
  4. Banque Sahelo-Saharienne(Sahel-Sahara BSIC)
  5. Barclays Bank Ghana
  6. Consolidated Bank Ghana
  7. Ecobank Ghana
  8. Energy Bank
  9. FBN Bank
  10. Fidelity Bank
  11. First Atlantic Bank
  12. First National Bank
  13. GCB Bank
  14. GN Bank
  15. GT Bank
  16. Republic Bank
  17. NIB
  18. Prudential Bank
  19. Societe General
  20. Stanbic Bank
  21. Standard Chartered Bank
  22. United Bank for Africa
  23. Universal Merchant Bank
  24. Zenith Bank
  25. Premium Bank
  26. OmniBank
  27. Heritage Bank
  28. GHL Bank
  29. ARB Apex Bank


The main benefit of investing with these institutions springs from the fact that constant monitoring from the regulator most often than not leads to proper procedures and books which has a safe effect on your money. The other side of the coin is that, due to these strict regulations, they are unable to engage in highly risky investments with depositors funds hence, the returns on the investment is not as high as some “greedy” investors may want.

They are however more secured and should be your first point of call when you decide to invest your hard-earned money.

The Class 2 institutions are Savings and Loans, Microfinances, Leasing Companies and Discount Houses. There is relatively lesser monitoring from Bank of Ghana. They have peculiar mother associations that close monitor their activities. There is an inherent risk in dealing with the Class 2 institutions as compared to the Class 1 banks.

The danger with some of these Class 2 institutions is that “working without license” syndrome. Most of these institutions especially Microfinance start operations without license from Bank of Ghana. They use this means to mobilize the capital required for the procuring of license.

Some of these institutions do not also employ the services of qualified bankers and professionals to structure their business. Some even go to the extent of taking “Senior High School” leavers as staff who have no idea of banking. Am not saying employing such caliber of individuals is wrong. However, banking is more technical that it seems and as such, wrong staff will bring wrong processes.

These institutions do not also have any direct and mandatory placement of deposit with the regulator and such as are able to work with the 100% deposit mobilized. This translate into the relatively higher returns on investment than the Class 1 institutions.

Let me break it down into practicality. Assuming Class 1 bank A receives a deposit of GHS 100,000 for investment same as Class 2 institution.

The Class 1 bank is required to immediately deposit GHS 10,000, which is 10% with BoG for safekeeping at no return. The bank will thus, be working with GHS 90,000. The interest to be paid to the investor will however have to be calculated on the full GHS 100,000.

On the other hand, the Class 2 institution can also work with the full GHS 100,000 without any direct debit to BoG.

Based on the few write up above, we need to be extra vigilant when we are deciding on where to invest.

  • How well do we know them?
  • Who are their owners?
  • What are their business line?
  • Which body is regulating their operation?

These are some of the questions we need to engage ourselves with before that final decision!

Any institution, which cannot be classified in any of the above classes for investment, is as risky as standing in the middle of the High Way. Its probability of win or loss is 100%.

The safety of your investment is as equally important as the returns to be earned.

I leave you with this famous quote by Ben Graham and it reads “The individual investor should act consistently as an investor and not a spectator”.

Happy Weekend!!!


Mr. Patrick Baah, Author

Patrick is a chartered banker and has been a qualified member of the Chartered Institute of Bankers, Ghana with a good membership standing since the year 2013.Patrick is a chartered banker and has been a qualified member of the Chartered Institute of Bankers, Ghana with a good membership standing since the year 2013.