The Bank of Ghana (BoG) has revoked the licences of twenty-three insolvent savings and loans companies and finance house companies.
The affected institutions include Ideal Finance, GN Savings and Loans, First Allied Savings and Loans, ASN Financial Services, Midland Savings and Loans, IFS Financial Services, Unicredit Savings and Loans and Women’s World Banking Savings and Loans.
Mr. Eric Nipah is the appointed receiver for the specified institutions whose licenses has been revoked.
Below are the reasons why BoG revoked GN savings and loans licences
1.The institution’s adjusted Net worth of negative GH¢30.70 million as at end May 2019 indicates that its paid-up capital is impaired in violation of Section 28(1) Act 930.
2. The institution’s adjusted capital adequacy ratio of negative 61.20% as at end May 2019 is in violation of Section 29(2) of Act 930.
3.Contrary to section 64 (2) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), the institution’s exposure to its related party has consistently been above the regulatory limit of 25% of net own funds (NOF). Exposures to other affiliates companies were mainly payments made by the bank on behalf of such affiliates.
4.The structure of GN’s balance sheet clearly shows that the bank mobilizes deposits for its related companies. The inability of these related companies to honour their obligation to GN has resulted in serious liquidity challenges and contributed to their insolvency as all related party exposures are non-performing. The institution’s high non-performing loans (NPL) was mainly attributed to these related party exposures, which were never paid, thereby putting the deposits of its customer at risk.
5.A recent Bank of Ghana investigation conducted at GN revealed that a significant amount (USD62,255,516.93, GBP718,528.59 and EUR4,200) of depositors’ funds held with GN had been transferred to International Business Solutions (another company owned by Groupe Nduom and which is based in the U.S.A) without any documentation to support such transfers in breach of section 19 of the Foreign Exchange Act 2006, Act 723, Section IV of Bank of Ghana Notice No. BG/GOV/SEC/2007/4, and subsequent Bank of Ghana Notices issued in August 2014 prohibiting such practices.
6.The company is yet to publish its 2018 audited accounts contrary to section 90 (2) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930). Furthermore, the company did not keep accounting records in a manner that gives an accurate and reliable account of the transactions of the company, and did not therefore show a true and fair view of its operations.
7.GN has suspended operations in seventy (70) of its branches including the Head office branch at Asylum Down and Castle Road branch, and temporarily suspended its entire management team without the approval of the Bank of Ghana contrary to section 25 (2) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), mainly as a result of its insolvency and liquidity challenges.
BoG also assured depositors’ of government’s commitment to protecting their funds, “the government has made funds available to enable the receiver to pay depositors after their claims are validated.”
