The Bank of Ghana's Director of Communications, Bernard Otabil, has made it clear that the Bank collaborated extensively with GN Bank throughout its liquidity issues, even after the latter requested to be reclassified as a savings and loans organisation.

He makes the point that the Central Bank's decision to revoke its license was made with good reason to preserve the integrity of the banking industry.

Otabil claims that even before the financial institution's operating license was revoked in 2019, the apex bank provided it enough time to resolve its issues.

"We tried to take our time with the case of GN Bank. When depositors started complaining all over the country because the Savings and Loans company could not meet withdrawals, it was time to act," Otabil told the media in Accra.

He further argued that the financial woes of GN Bank and depositors' agitation prior to its collapse are well-documented in the media.

"Aside from the reported cases in the media, the Financial Stability Department of the Bank of Ghana received complaints about the company's inability to pay deposits on demand. To ensure an orderly exit of the company and protect the sanctity of the banking sector, the company's license had to be withdrawn in accordance with the provisions of the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930)," the BoG communications director emphasized.

Bernard Otabil said the Bank of Ghana has since provided details on the various infractions that led to the revocation of the license of GN Savings and Loans Company.

He also mentioned that GN Bank, unable to meet the new minimum regulatory capital requirement of GH¢400 million by the end of December 31, 2018, applied to the Bank of Ghana for reclassification to a Savings and Loans Company, a request which the Bank obliged.

“However, the license of the Savings and Loans Company was revoked in August 2019 when the Bank of Ghana realized that the company still had liquidity challenges with customer complaints sent to the Financial Stability Department,” he pointed out.

Mr. Otabil also dispelled any notion that there was a "mistake" with the revocation of the license of one of the institutions that lost its license.

"The Bank of Ghana published details of the reasons for the revocation of the license of each and every institution. Whereas the dominant reason had been about insolvency and the loss of franchise value of the affected institutions, there were other reasons too. In a particular case, reference was made to a bank that was licensed based on false capital. Fortunately, it did not have that many deposits, and therefore the Receiver did not rely on government resources to pay off their depositors. There was no mistake here, and the misinformation must be corrected," Mr. Otabil clarified.

"I assure the general public of the Bank of Ghana's commitment to promoting the integrity and stability of the financial system," he added.

In 2019, the Bank of Ghana revoked the licenses of 23 savings and loans companies and finance house companies, which included the GN Bank. The bank subsequently sought legal action challenging the revocation of GN Savings and Loans’ license by the Bank of Ghana.

But in January of this year, an Accra High Court presided over by Justice Gifty Addo Adjei upheld the legality of the Central Bank’s decision, emphasizing the institution’s right to revoke the license due to governance deficiencies that rendered GN Savings and Loans unable to meet its debt obligations.

NOQ