The recent Court of Appeal ruling in favour of GN Savings & Loans could mark the first major step toward the possible restoration of the institution’s licence, nearly seven years after the Bank of Ghana revoked it during the country’s banking sector cleanup.

At the time of the revocation in August 2019, the Bank of Ghana outlined a long list of alleged regulatory and prudential breaches against GN savings and loans, including related-party transactions, breaches of capital adequacy requirements, liquidity challenges, foreign exchange violations, failure to publish audited accounts, and the transfer of depositor funds to affiliated companies within Groupe Nduom.

In a 2019 statement by the Bank of Ghana, the central bank argued that GN Savings & Loans was insolvent under Section 123(4) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), citing a negative capital adequacy ratio of minus 61% and severe liquidity challenges.

The Bank of Ghana also accused the institution of exceeding related-party exposure limits and transferring significant sums, including more than $62 million, to International Business Solutions, a U.S.-based Groupe Nduom company, without proper documentation.

However, lawyer for Groupe Nduom, Cletus Alengah, says those additional allegations were not actually the legal basis upon which the licence was revoked.

Speaking on JoyNews’ Beyond the Numbers on Friday, May 22, Mr. Alengah argued that the central bank specifically relied on Section 123 of Act 930, a provision that only permits mandatory revocation on insolvency grounds.

“The Bank of Ghana said they were revoking GN’s licence under Section 123. So once they were specific that they were revoking it under Section 123, what it means is that either GN Bank is insolvent or GN Bank will become insolvent in the next 60 days. That is the only reason,” he said.

According to him, the central bank conflated two separate legal procedures under Act 930.

He explained that breaches such as capital adequacy violations, liquidity infractions, related-party exposures, and other regulatory breaches fall under a separate revocation process outlined in Section 16 of the law, which requires notice, an opportunity to remedy breaches, and a regulatory process before a licence can be revoked.

“Under Section 16, when there are breaches of capital adequacy ratio, transfers or any breach of regulations issued by the Bank of Ghana, they can revoke your licence, but that procedure requires that they give you notice to remedy the breach and give you time,” he explained.

“The Bank of Ghana did not use that procedure. The Bank of Ghana came under Section 123. Under Section 123, there is only one reason that you can revoke a licence and that is insolvency.”

Mr. Alengah further argued that many of the breaches publicly cited by the Bank of Ghana already had specific penalties prescribed under the law and were not intended by lawmakers to automatically trigger licence revocation.

“The lawmakers themselves realised that these are not matters that should lead to revocation of a licence. So they provided punishments for those breaches, which are administrative fines,” he said.

He maintained that this formed a major plank of GN’s legal argument before the courts.

The lawyer also suggested that the Court of Appeal’s ruling effectively accepted the argument that GN Savings & Loans was not insolvent at the time its licence was revoked.

“That’s probably why the court came to the conclusion they came to,” he said.

The full ruling of the Court of Appeal is yet to be released. Once available, lawyers for the Bank of Ghana are expected to study the judgment before deciding whether to seek a stay of execution and potentially appeal to the Supreme Court.

For now, however, the Court of Appeal decision remains the prevailing ruling, potentially opening the door for efforts toward rebuilding GN Savings & Loans. The company is expected to address the media at a press conference next week.