The management of GN Bank is yet to finalize its arrangements to transition into a savings and loans company from a universal bank.
This is after the Bank of Ghana announced last week that it had approved an application for the bank to be downgraded into a savings and loans company after failing to meet the Central Bank’s GH¢ 400 million minimum capital requirement.
The Bank of Ghana has given GN Bank until the end of June 2019 to complete its transitional plan but the management is yet to come up with the plan and begin its implementation.
The bank is expected to change its signage and wind up services that are not permitted under a savings and loans license.
The Bank of Ghana in a statement on the situation of GN Bank said, “The Bank of Ghana will closely monitor implementation of the approved transitional plan which is expected to be completed by the end of June 2019. In this regard, the Bank of Ghana has appointed an advisor for GN pursuant to section 101 (1) of the Banks and Specialized Deposit-Taking Institutions Act of 2016 (Act 930), to advise management of GN with a view to ensuring a smooth transition to a viable savings and loans company. The Advisor will hold office until otherwise advised by the Bank of Ghana and will furnish the Bank of Ghana with a status report on the GN in three months and as frequently as the Bank of Ghana may require.”
The development within GN Bank had come about as a result of new reforms instituted by the Bank of Ghana to clean up the banking sector.
The measures by the central bank have resulted in the reduction of universal banks from 34 to 23, including the exit of Bank of Baroda which voluntarily opted out of the Ghana market due to a restructuring drive by the Indian government.
The BoG reforms have led to some companies merging to survive but the management of GN Bank said they deliberately opted for a downgrade to a savings and loans company rather than a merger or sell out to avoid a dilution of their operation with foreign interest.