BY Grace Zigah
The Court of Appeal has delivered a major legal victory to businessman and founder of Groupe Nduom, Papa Kwesi Nduom, after unanimously restoring the operating licence of GN Savings and Loans Company Limited nearly seven years after it was revoked during Ghana’s controversial banking sector clean-up exercise.
The decision marks one of the most significant judicial developments connected to the financial sector reforms introduced by the Bank of Ghana between 2017 and 2019, which resulted in the collapse, revocation or consolidation of several financial institutions across the country.
A three-member panel of the Court of Appeal overturned an earlier High Court judgment that had upheld the Bank of Ghana’s decision to revoke the licence of GN Savings and Loans.
The appellate court ruled that the revocation decision was unfair and unreasonable, effectively quashing both the regulator’s action and the High Court ruling that supported it.
By the latest ruling, the Court of Appeal ordered that possession, management and control of the company’s assets and operations be returned to the shareholders of GN Savings and Loans.
The court further directed the receiver appointed to manage the company after the revocation to hand over the institution’s assets and operational activities.
The legal battle dates back to January 4, 2019, when the Bank of Ghana reclassified GN Bank as a savings and loans company following regulatory capital challenges identified during the nationwide banking sector reforms.
The institution subsequently became known as GN Savings and Loans Company Limited.
However, barely seven months later, on August 16, 2019, the Bank of Ghana under then Governor Ernest Addison revoked the company’s operating licence as part of the sweeping financial sector clean-up programme.
The central bank subsequently appointed Eric Nana Nipah as receiver to oversee the company’s affairs.
The banking sector clean-up exercise, introduced under the Akufo-Addo administration, was aimed at strengthening Ghana’s financial sector by addressing insolvency, poor corporate governance, weak capitalisation and regulatory breaches within banks and specialised deposit-taking institutions.
During the exercise, several banks, savings and loans companies, microfinance institutions and finance houses lost their licences, triggering nationwide debate over the impact on depositors, workers and indigenous Ghanaian-owned financial institutions.
GN Savings and Loans, together with other companies linked to Groupe Nduom, became one of the most prominent casualties of the exercise.
Dr. Papa Kwesi Nduom consistently challenged the regulator’s actions, insisting that his companies were solvent and that the Bank of Ghana acted unfairly during the revocation process.
Following the licence withdrawal in 2019, Groupe Nduom initiated legal action at the High Court in Accra challenging the revocation and seeking restoration of the company’s operations.
However, on January 24, 2024, the High Court presided over by Justice Addo upheld the Bank of Ghana’s decision, ruling in favour of the regulator.
It was this High Court decision that the shareholders of GN Savings and Loans appealed against at the Court of Appeal.
The latest ruling therefore represents a dramatic reversal of the earlier legal outcome and potentially opens a new chapter in the long-running disputes surrounding the banking sector reforms.
Legal analysts say the decision could have wider implications for some of the unresolved cases connected to the financial sector clean-up and may reignite debate over whether due process was fully followed during some licence revocations.
The ruling is also likely to intensify discussions about the human and economic impact of the clean-up exercise, which led to thousands of job losses and significant financial disruption for customers and investors.
Supporters of the clean-up exercise have long argued that the reforms were necessary to restore confidence and stability within Ghana’s banking system.
Critics, however, maintain that some institutions were unfairly targeted and that indigenous businesses suffered disproportionately during the process.
