The Supreme Court of Ghana has affirmed that the Bank of Ghana (BoG) acted within its legal rights when it revoked the operating licence of UniCredit Ghana Limited.

The highest court’s unanimous decision reverses an earlier judgment by the Court of Appeal, thus upholding the High Court’s initial ruling.

The Supreme Court panel consisting of Chief Justice Gertrude Araba Esaaba Sackey Torkornoo; Justice Mariama Owusu; Justice Prof. Henrietta Joy Abena Nyarko Mensa-Bonsu; Justice Ernest Yao Gaewu; and Justice Yaw Darko Asare ruled that the BoG did not err in its decision to declare UniCredit insolvent and subsequently revoke its licence.

Initial High Court Ruling

On August 16, 2019, the BoG declared UniCredit insolvent, citing its failure to meet required financial thresholds under section 123 of the Banks and Specialised Deposit Taking Institutions Act of 2016 (Act 930). This action led Hoda Holdings Ltd., the majority shareholder of UniCredit, to seek judicial review and an injunction against the BoG’s decision, arguing that UniCredit had not been given a fair hearing.

However, on March 18, 2021 the High Court, led by Justice Gifty Agyei Addo, ruled in favour of BoG. The court found that BoG had issued numerous notices for UniCredit to rectify its capital deficiencies, and revocation of the licence was a justified measure following UniCredit’s failure to comply. Justice Addo’s judgment emphasised that BoG’s actions were consistent with the regulatory framework provided by Act 930, thus placing UniCredit under receivership lawfully.

Court of Appeal’s Reversal

Dissatisfied with the High Court’s decision, Hoda Holdings appealed to the Court of Appeal. On July 7, 2022, the appellate court overturned the High Court’s ruling. The panel of Justices Janapare A. Bartels-Kodwo, Merley Wood and G.S. Suurbaareh argued that BoG should have adhered to the procedural steps outlined in section 16(3&4) of Act 930 before revoking UniCredit’s licence. They concluded that BoG’s failure to follow these steps deprived UniCredit of a fair hearing, thereby ruling in favour of Hoda Holdings.

The BoG, dissatisfied with the Court of Appeal’s decision, escalated the matter to the Supreme Court. In a final and binding verdict, the Supreme Court unanimously overturned the Court of Appeal’s judgment. The apex court’s ruling reaffirmed the High Court’s position that BoG had not committed any procedural errors in revoking UniCredit’s licence.

Delivering the ruling, the Chief Justice noted that BoG had acted within its mandate and followed due process in addressing UniCredit’s insolvency issues. “The evidence presented clearly indicates that UniCredit was insolvent prior to the revocation of its licence. The Bank of Ghana provided ample opportunities for rectification, and its actions were in full compliance with Act 930,” she stated.

Implications and reactions

This landmark decision by the Supreme Court reinforces the BoG’s regulatory authority and its commitment to maintaining stability within the financial sector. The ruling is seen as a validation of BoG’s stringent measures to protect depositors and ensure the soundness of financial institutions in Ghana.

In response to the ruling BoG expressed satisfaction, emphasising its dedication to upholding financial integrity. “The Supreme Court’s decision is a testament of our unwavering commitment to enforcing banking regulations and ensuring that financial institutions operate within the legal framework,” a BoG spokesperson remarked.

On the other hand, representatives of Hoda Holdings expressed their disappointment but acknowledged the finality of the Supreme Court’s decision. “While we respect the verdict, we maintain that our actions were in defence of our rights as stakeholders,” a spokesperson for Hoda Holdings commented.

The ruling marks an end to a protracted legal battle and sets a precedent for the interpretation of banking regulations in Ghana. It underscores the importance of adherence to regulatory directives and the judiciary’s role in resolving complex financial disputes.

As the financial sector continues to evolve, this decision reaffirms the BoG’s critical role in safeguarding the banking system’s stability and integrity.