Court of Appeal Restores GN Savings Licence, Overturns BoG Revocation

The Court of Appeal has unanimously restored the operating licence of GN Savings and Loans Company Limited, overturning an earlier High Court ruling that upheld the Bank of Ghana’s decision to revoke the company’s licence.

The latest judgment effectively nullifies the Bank of Ghana’s 2019 decision to shut down the financial institution as well as the subsequent High Court ruling that affirmed the action. The appellate court also ordered the receiver to return possession, management and control of the company’s assets and operations to its shareholders.

Background

GN Savings and Loans, formerly known as GN Bank, evolved from First National Savings and Loans (FNSL) and grew into one of Ghana’s largest indigenous financial institutions with branches across the country.

As part of Ghana’s financial sector clean-up exercise initiated in 2018, the Bank of Ghana introduced stricter regulatory and capital requirements for banks and specialised deposit-taking institutions. Following its inability to meet the new minimum capital requirement for universal banks, GN Bank was downgraded to a savings and loans company on January 4, 2019, and subsequently renamed GN Savings and Loans Company Limited.

However, on August 16, 2019, the Bank of Ghana revoked the company’s operating licence, citing insolvency, liquidity challenges, breaches of corporate governance and violations of prudential regulations. The move formed part of the broader banking sector reforms aimed at sanitising Ghana’s financial industry. Eric Nana Nipah was later appointed receiver for the company.

The decision was strongly contested by Groupe Nduom, led by businessman Dr. Papa Kwesi Nduom, who argued that the revocation was unfair and unreasonable. According to the shareholders, the Bank of Ghana failed to adequately consider significant debts owed to the company by the government and some state institutions.

In January 2024, the High Court ruled in favour of the Bank of Ghana and upheld the revocation of the licence. Dissatisfied with the judgment, the shareholders proceeded to the Court of Appeal to challenge the ruling.

The Court of Appeal’s latest decision is being viewed as a major legal victory for Groupe Nduom and has reignited public debate over Ghana’s controversial banking sector clean-up exercise.