The recent ruling by the Court of Appeal in favour of GN Savings & Loans could become a major turning point in the long-running dispute between the financial institution and the Bank of Ghana, nearly seven years after its licence was revoked during Ghana’s banking sector cleanup.

The decision has raised the possibility of the institution regaining its licence, although the full judgment is yet to be released and further legal action may still follow.

GN Savings & Loans lost its operating licence in August 2019 after the Bank of Ghana cited several regulatory and financial breaches. These included alleged violations involving capital adequacy requirements, liquidity challenges, foreign exchange infractions, related-party transactions, and the transfer of depositor funds to affiliated companies within Groupe Nduom.

At the time, the central bank said the company was insolvent under Section 123(4) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930). According to the Bank of Ghana, the institution recorded a negative capital adequacy ratio of minus 61% and was facing severe liquidity difficulties.

The central bank also alleged that GN Savings & Loans transferred more than US$62 million to International Business Solutions, a U.S.-based company linked to Groupe Nduom, without proper documentation.

However, lawyer for Groupe Nduom, Cletus Alengah, has argued that many of the allegations publicly raised by the Bank of Ghana were not the actual legal basis for the revocation of the licence.

Speaking on JoyNews’ Beyond the Numbers on Friday, May 22, Mr. Alengah said the Bank of Ghana specifically relied on Section 123 of Act 930 when revoking the licence, a provision he says only allows revocation on grounds of insolvency.

“The Bank of Ghana said they were revoking GN’s licence under Section 123. So once they were specific that they were revoking it under Section 123, what it means is that either GN Bank is insolvent or GN Bank will become insolvent in the next 60 days. That is the only reason,” he stated.

According to him, other alleged breaches such as capital adequacy violations, liquidity infractions, and related-party transactions fall under a different legal process outlined in Section 16 of the same law.

He explained that Section 16 requires regulators to notify institutions of breaches and give them the opportunity to correct the issues before revoking a licence.

“Under Section 16, when there are breaches of capital adequacy ratio, transfers or any breach of regulations issued by the Bank of Ghana, they can revoke your licence, but that procedure requires that they give you notice to remedy the breach and give you time,” he explained.

“The Bank of Ghana did not use that procedure. The Bank of Ghana came under Section 123. Under Section 123, there is only one reason that you can revoke a licence and that is insolvency.”

Mr. Alengah also argued that lawmakers had already prescribed administrative fines for many of the breaches cited by the central bank, suggesting they were not intended to automatically lead to licence revocation.

“The lawmakers themselves realised that these are not matters that should lead to revocation of a licence. So they provided punishments for those breaches, which are administrative fines,” he said.

He believes the Court of Appeal’s ruling may indicate that the judges agreed GN Savings & Loans was not insolvent at the time its licence was revoked.

“That’s probably why the court came to the conclusion they came to,” he added.

The full judgment from the Court of Appeal is expected in the coming days. Legal representatives for the Bank of Ghana are likely to review the ruling before deciding whether to seek a stay of execution or appeal the case at the Supreme Court.

For now, the ruling stands as a significant legal victory for GN Savings & Loans and could pave the way for discussions around rebuilding and restoring the institution. The company is also expected to address the media at a press conference next week.