The Central Bank of Ghana has announced the revocation of the operating licenses of 23 savings and loans companies for failing to meet operational standards.The affected companies have been declared insolvent after the Bank of Ghana (BoG) engaged them within a reasonable period of time to enable them to return to solvency.
A statement from the bank on Monday says, “Pursuant to Section 123 (1) of the Banks and Specialised Deposite-Taking Institutions Act, 2016 (Act 930), the Bank of Ghana (“BoG”) on Friday 16 August 2019 revoked the licences of twenty-three (23) insolvent Savings and Loans Companies (“S&Ls”) and Finance House Companies (“Finance Houses”).
The bank has then appointed Eric Nana Appiah, a Driector of Pricewaterhouse Coopers (Ghana) Limited as the receiver for the purpose of winding down the affairs of the savings and loans companies and finance houses in question.
The closure of GN Savings and Loans Ltd., the biggest lender impacted by the central bank’s directive, could lose as many as 2,700 jobs, Frank Owusu-Ofori, head of corporate affairs for Accra-based Groupe Nduom, the company’s parent, said by phone. The figure includes 400 cleaners who are contracted at the firm’s 230 branches and another 900 employed by a private security company, he said.
The investment-holding company is exploring legal options to challenge the withdrawal of GN’s license, Owusu-Ofori said.
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The banking-sector cleanup has seen the number of lenders cut by almost a third to 23
Savings and loans companies also reduced to 25 from 40, finance houses to 11 from 19, and micro-finance and micro-credit lenders to 168, from 554.
The crackdown also triggered a run on fund managers, which have 4 billion cedis tied up in fixed-term investments with banks rescued during the clean up, as well as savings and loans companies and microlenders. There is another 5 billion cedis locked up in illiquid hard-to-retrieve ventures such as unlisted bonds, direct private equity stakes and related party deals with small- to medium-sized companies.
For Groupe Nduom, the loss of GN’s license comes as a double whammy. The investment firm’s Gold Coast Fund Management Ltd. was compelled to stop taking funds from investors as clients rushed to pull their savings.
Gold Coast stopped taking investments since October, Owusu-Ofori said. The money manager is in touch with the Securities and Exchange Commission to complete a prospectus so it can offer customers bonds of as much as 3 billion cedis ($549 million) to cover investments that are locked up in a structured finance fund.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.