Why did BoG issue a savings & loans license to GN Bank in January 2019, only to revoke it August 2019?

Yaw Sapong the Advisor the Bank of Ghana sent to GN Savings to observe the activities there wrote in a confidential report as follows:

“Despite the corporate governance, operational and liquidity challenges, the company appears to be the only banking institution with national outreach in several remote communities of the country.

The institution’s two hundred and ninety-six (296) branches, which are more than GCB Bank’s one hundred and sixty-six (166) branches and Consolidated Bank’s one hundred and six (106) branches, are located in several rural communities. Some customers of the company continue to bank with the institution despite these challenges; with activity gradually picking up through the patronage of susu mobilization; the recently introduced “Local/Regional Banking”, Salary Payment, Remittance Payment and Cheque Clearing,” BOG Affidavit Exhibit YAO7.

A review of the Affidavit and the Written Address submitted by the Bank of Ghana to the Human Rights Court presided over by Justice Gifty Agyei-Addo makes it very obvious that the Central Bank did not rely on the facts on the ground to revoke the license of this much needed financial institution with a national footprint.

The Bank of Ghana in a letter dated 4 January 2019 approved a request from the Directors of GN Bank and granted a savings and loans license and thus reclassified GN Bank to a Savings and Loans Company.

Consequently, the Bank of Ghana gave GN Bank, a six-month transitional period to move its operations from a universal bank to a fully-fledged Savings and Loans company by June 30 2019.

It is clear that GN Savings did precisely what it was asked to do by the Bank of Ghana in its letter dated 4th January 2019.

GN Savings delivered a Transition Report to the Bank of Ghana in July 2019. That report provided an overview of the bank’s transition to a savings and loans company under the following processes/headings.

· External Relations

· Banking Operations

. LRB/Community Banking Concept

· Remittances and Mobile Money Business

· Human Capital

· Information Technology

· Restructuring/Rationalization

· Financial Reports

· Future Prospects

Management wrote in the report:

“In furtherance to meeting the conditions stipulated in the Bank of Ghana letter announcing the reclassification of GN Bank to a Savings and Loans Company, the following documentation and processes were executed and submitted in fulfillment of BOG guidelines.

· Business/Feasibility Studies

· Winding down foreign exchange operations

· Public Communication Plan and Rebranding

· Discontinuation of business lines directly affected by the reclassification

· Change in name and objects of the company

· Branch Rationalization and Downsizing

· Revised copies of Policies and Operational Manuals

· Partnership with Ecobank to act as Clearing Bank on behalf of GN Savings.

All of these were done at a significant cost to the bank and shareholders.

The conclusion in the Transition report stated:

“Based on the analysis of facts and figures available and coupled with the measures (like the introduction of innovative concepts such as LRB and Community Banking, branch rationalization and downsizing etc) the Board of Directors and management are stabilizing GN Savings. On the basis of results obtained so far, it is envisaged that GN Savings is poised to regain its strong position in retail banking across the entire country with a singular objective of vigorously promoting financial inclusion and bringing banking to the doorstep of every Ghanaian.



This will depend on support from the regulator, BOG; an efficient banking operation; and an improvement in the liquidity position through the contribution of new capital by shareholders, the payment by Government Agencies of IPCs assigned to the institution and retiring of loans from customers including Gold Coast Fund Management.”

Not surprisingly, it is the matter of the non-payment of accounts receivable from Government Agencies that has become the main issue to be determined by the Human Rights Court.

If GN Savings had become such a national asset that was helping reduce the numbers of the unbanked in the remotest areas of the country; and had assets of significant value sitting with the Government of Ghana and its agencies; why the hurry to collapse such an institution? Malicious intent as argued by Attorneys for Dr. Nduom and Others?

The answer to this question rests with Justice Gifty Agyei-Addo.