Court of Appeal restores license of GN Savings and Loans

The Court of Appeal of Ghana has unanimously restored the operating licence of GN Savings and Loans Company Limited, overturning an earlier High Court ruling that upheld the revocation of the company’s licence during Ghana’s banking sector clean-up exercise.

The decision was delivered by a three-member panel of the Court of Appeal, which ruled that the revocation of the company’s licence by the Bank of Ghana (BoG) was unfair and unreasonable.

As part of the judgment, the appellate court quashed both the Bank of Ghana’s decision to revoke the licence and the earlier High Court ruling that had affirmed the regulator’s action.

The court further directed the appointed receiver to hand over possession, management, control of assets, and all operational activities of the company back to its shareholders.

The ruling marks a major legal victory for Groupe Nduom, owners of GN Savings and Loans, led by Papa Kwesi Nduom.

The legal dispute dates back to Ghana’s controversial financial sector reforms and banking sector clean-up initiated by the Bank of Ghana between 2017 and 2019.

On January 4, 2019, GN Bank Limited was reclassified as a savings and loans company and subsequently renamed GN Savings and Loans Company Limited following regulatory actions by the central bank.

However, just seven months later, on August 16, 2019, the Bank of Ghana — then under the leadership of Ernest Addison — revoked the operating licence of GN Savings and Loans Company Limited as part of the nationwide banking sector clean-up exercise.

At the time, the central bank appointed Eric Nana Nipah as receiver to oversee the company’s assets and operations following the revocation.

Shortly after the decision, Groupe Nduom filed a legal challenge at the High Court in Accra, arguing that the revocation of the licence was unlawful, unjustified, and procedurally unfair.

On January 24, 2024, Justice Addo of the High Court ruled in favour of the Bank of Ghana and upheld the revocation decision.

It was this High Court ruling that the shareholders of GN Savings and Loans appealed against at the Court of Appeal, leading to the latest judgment overturning both decisions.

The ruling is expected to generate significant debate within Ghana’s financial and legal sectors, particularly regarding the banking sector clean-up exercise, which led to the collapse or restructuring of several financial institutions.

Analysts say the decision could have wider implications for ongoing and future legal disputes connected to the banking reforms and compensation claims by affected financial institutions and investors.

The Bank of Ghana has not yet publicly responded to the Court of Appeal’s ruling at the time of reporting.