The BoG press release leading to the closedown of some 23 Savings and Loans companies in the country is surely increasing the number of people who are unemployed.
Estimated suggest that in GN Savings and Loans alone, over 1,400 workers of workers will lose their jobs in the coming weeks.
Their expected dismissal is likely to be a fall out from the revocation of the license of the company.
GN Savings and Loans story in brief
The GN Savings and Loans downgraded it self as a bank back to the savings and loans status when the regulator wanted to close it down.
The BoG followed up with its intent to close down then GN bank while it operated as a saving and loans account becuase, it could not meet requirements of the regulator.
The reason for the closure included GN Savings and Loans for failing to meet the new minimum capital requirement for banks.
Government has appointed a receiver to lead the process of payment of depositors and debt recovery.
The Bank of Ghana (BoG) announced that it has reached the conclusion that GN is currently insolvent. This is accouding to section 123 (4) of the Banks and SDIs Act, 2016 (Act 930), and is in breach of its key prudential regulatory requirements.
The Capital Adequacy Ratio (CAR) of GN Savings and Loans
According to the BoG, the Capital Adequacy Ratio (CAR) of GN Savings and Loans is now -61%. The capital adequacy ratio is used to measure a company’s ability to meet its obligations. A negative ratio is a sign that the institution does not have enough capital to take care of unexpected losses and is a high-risk entity.
Generally, banks with high capital adequacy ratio are said to be safer and have the capacity to meet their financial obligations.
In the banking sector, it also helps measure the bank’s capital expressed as a percentage of its risk-weighted credit exposure. Customers’ deposits are protected and the stability and efficiency of the bank’s financial systems are safeguarded by regulators.
The -61% is more than the minimum requirement of 13. It is also facing a severe liquidity crisis. This lead to numerous complaints received by the Financial Stability Department of the Bank of Ghana from aggrieved customers. These customers have not been unable to access their deposits with the institution for the last several months.
What is more, it has consistently failed to meet the minimum cash reserve requirement of 10% of its total deposits, since the end of the first quarter of 2019.
GN’s shareholders have failed to restore the bank to the required regulatory capital and liquidity levels in spite of long-standing promises that new capital was expected from foreign investors.”
Over 1,400 workers of GN Savings and Loans to lose jobs
While the company was operating over 240 branches across the country with presence in almost all districts in Ghana, sources at the company say over 1,400 workers may lose their jobs.
Most branches may be closed down, the source added. Cashiers, mobile bankers, drivers, security and cleaners may be the casualties.