A statement from the Bank of Ghana in August 2019 revealed that GN Savings and Loans breached a number of banking rules and regulations leading to the revocation of its license by the regulator of the banking industry.

This is contrary to GN Savings and Loans that the Central Bank deliberately shutdown the operations of the Tier 2 bank without any recourse to the law.

For example, the BoG statement pointed out that GN’s adjusted net worth of negative GH¢30.70 million as of the end of May 2019 indicated that its paid-up capital is impaired in violation of Section 28(1) Act 930.

Similarly, the institution’s adjusted Capital Adequacy Ratio of negative 61.20% as at end May 2019 is in violation of Section 29(2) of Act 930.

Contrary to section 64 (2) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), the regulator of the banking industry said the institution’s exposure to its related party was consistently above the regulatory limit of 25% of net own funds (NOF). Exposures to other affiliates companies were mainly payments made by the bank on behalf of such affiliates.

Also, the structure of GN’s balance sheet, according to the Bank of Ghana, clearly showed that the bank mobilised deposits for its related companies. “The inability of these related companies to honour their obligation to GN has resulted in serious liquidity challenges and contributed to their insolvency as all related party exposures are non-performing. The institution’s high non-performing loans (NPL) was mainly attributed to these related party exposures, which were never paid, thereby putting the deposits of its customer at risk”, it added.

The Bank of Ghana continued that its investigation at GN revealed that a significant amount (US$62,255,516.93, GBP718,528.59 and EUR4,200) of depositors’ funds held with GN had been transferred to International Business Solutions (another company owned by Groupe Nduom and which is based in the U.S.A) without any documentation to support such transfers in breach of section 19 of the Foreign Exchange Act 2006, Act 723, Section IV of Bank of Ghana Notice No. BG/GOV/SEC/2007/4, and subsequent Bank of Ghana Notices issued in August 2014 prohibiting such practices.

Again, the company failed to publish its 2018 audited accounts contrary to section 90 (2) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

Furthermore, the Central Bank said the company did not keep accounting records in a manner that gives an accurate and reliable account of the transactions of the company, and did not therefore show a true and fair view of its operations.

It also stated that GN suspended operations in 70 of its branches including the Head office branch at Asylum Down and Castle Road branch, and temporarily suspended its entire management team without the approval of the Bank of Ghana contrary to section 25 (2) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), mainly as a result of its insolvency and liquidity challenges.