BoG/uniCredit ruling watershed moment for financial sector confidence  


Irrespective of the ultimate conclusion of the legal tussle between defunct Savings and Loans Company uniCredit and the industry regulator, the Bank of Ghana (BoG), the Court of Appeal’s decision to rule in favour of the former in the matter of revocation of its licence will have far-reaching and long-lasting implications for the nation’s financial landscape.

This is the view of some financial sector analysts who, despite variances in their outlook, described the decision as a watershed moment for the local financial ecosystem.

The Court of Appeal on Thursday, July 7, 2022 in a unanimous decision ruled in favour of uniCredit shareholders who had sought a reversal of the regulator’s decision to revoke the company’s licence in 2019 – declaring the BoG’s actions an unlawful exercise in the process.

Commenting on the development, Dean of the University of Cape Coast Business School (UCCBS), Professor John Gatsi, reasoned that it could reverse gains in public confidence, especially as some concerns have lingered since the financial sector clean-up commenced in 2018.

“Whatever decision the Bank of Ghana makes, whether to proceed to the Supreme Court or not, it cements the view that due process was not followed to the letter in the matter of the financial sector clean up; and that will resonate with other stakeholders – customers, investors, directors of banks and the observing public – who feel they might have been treated unfairly. This does not bode well for confidence in the regulator,” he explained.

According to Prof. Gatsi, the ruling could open a floodgate of legal actions against the regulator, especially as some agents of the BoG were complicit in the lapses which allowed the rot in the sector to fester.

“With some still firmly believing that the reasons for revocation of these licences were not entirely and objectively financial, we can expect a lot more legal activities – especially if there is a significant political shift… the varying value of the cost of the clean-up will continue to be a matter of public interest,” he added.


Conversely, Lawyer Benjamin Zigorsh-Nyakpenu of Hales Solicitors – a member of the legal team for uniCredit – speaking exclusively with the B&FT said the decision will prove monumental for enhancing public confidence in the rule of law within the financial sector.

He argued that since the issue in contention is not the regulator’s administrative power to revoke licences or the solvency or otherwise of uniCredit but rather the procedure the BoG applied in its actions against the S&L Company, the decision sets a profound precedent as it demonstrates that all entities, including regulators, must abide by the law.

“We all recognise that the Bank of Ghana has the power to revoke a licence under the prevailing legal framework; but in this particular case, our contention has always been that though the Bank of Ghana has the power, it has not used the proper power given under the law. So, we say that as a regulator they have administrative power – but the exercise of those powers must first confirm with the law and principles of natural justice.

“Our case has always been that when BoG is revoking a license under the law, it must follow procedures strictly as there is distinction between insolvency and liquidity challenges with the attendant mechanisms for addressing them,” he said.

The legal practitioner, while conceding that the development might cause some consternation in the short-term, stated it indeed bodes well for the sector as it sets precedence and stakeholders are presented with an opportunity to further firm-up the regulatory framework.

“It is a good development, as it tells us that even the Bank of Ghana must also conform to the law. This will only go to strengthen the legal framework as far as the financial sector is concerned. It should boost confidence, because this shows that activities of the regulators, in this case the Bank of Ghana, are also subject to the law,” he said.

He expressed optimism that the BoG, despite the likelihood of an appeal, will take the decision in good faith.

“The law – the Banks and Specialised Deposit-Taking Institutions Act, 2016 – is of recent origin and when there is conflict the courts are there to explain. While it is within its rights to proceed to the Supreme Court, I am of the view that in the end the BoG will also accept the decision.”

While there has been no official indication yet, information gathered by the B&FT indicates the regulator will proceed to the apex court of the land for an appeal.

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