The fate of close to 1,400 workers of the collapsed GN Savings and Loans hangs in the balance after the central bank’s decision to revoke their operating license.
The company recently applied to downgrade its operations to savings and loans after operating as a bank for a couple of years.
GN Savings and Loans until the collapse boasts of an extensive branch network spread throughout the country. According to a source close to the company, it has a conservative estimate of about 1,400 workers who will now face the prospective being without a job.
The central bank in a press release that announced the shut down stated some of the affected employees will be engaged to assist in the receivership process but there was no clarity on how many of such employees will be taken aboard.
What the BoG said about GN Savings and Loans
It must be noted that GN’s insolvency problems are largely attributable to overdraft and other facilities it extended to its related parties who are other companies in the Groupe Ndoum network of businesses, under circumstances that violated relevant prudential norms.
Of particular interest are the funds totaling GH¢761.55 million that GN Bank as it then was, placed with its sister companies Ghana Growth Fund (Gold Coast Advisors) and Gold Coast Fund Management Limited (now Blackshield Capital Management), both licensed by the Securities and Exchange Commission.
Some of these funds were used by the two related parties to pay their customers whose investments with them had matured, while some were also used to fund road and other contractors, who claim to have worked on Government projects.
It is important to note that the IPCs claimed by GN are not supported by transactions that were entered into directly by GN and such contractors or Government and its entities.
They reflect transactions entered into by Ghana Growth Fund or Gold Coast Fund Management with these contractors using funds taken from GN under circumstances that violated prudential norms.
The failure of the two related parties to pay back these funds to GN affected GN’s capital position, leading eventually to its insolvency and acute liquidity challenges.