Ghanaian tycoon Paa Kwesi Nduom claims deliberate undervaluation forced GN Bank collapse

Oluwatosin Racheal Alabi -

Key points:

  • Paa Kwesi Nduom alleges the Bank of Ghana deliberately undervalued GN Bank’s assets, leading to its collapse.
  • The undervaluation caused a liquidity crisis as customers lost confidence and withdrew their funds en masse.
  • The collapse of GN Bank has sparked calls for regulatory reforms to ensure fairness and protect indigenous banks in Ghana.

Billionaire and renowned business tycoon Paa Kwesi Nduom has claimed that the collapse of his GN Bank was a result of a deliberate undervaluation of the bank’s assets by the Bank of Ghana. 

Nduom, a respected figure with vast interests in various sectors, argues that the undervaluation created a false narrative of financial instability, leading to a catastrophic loss of confidence among customers and investors.

Undervaluation allegations

Nduom asserts that the Bank of Ghana’s assessment of GN Bank was not only inaccurate but intentionally skewed to portray the bank as financially unsound. This evaluation, he claims, drastically undervalued the bank’s assets and ignored key financial indicators that demonstrated GN Bank’s resilience and potential for recovery. Nduom suggests that the regulatory body might have had ulterior motives, possibly influenced by larger multinational banks that stand to benefit from the fall of indigenous institutions.

According to Nduom, the undervaluation directly contributed to a liquidity crisis. Customers, panicked by the perceived instability, began withdrawing their funds en masse. This run on the bank severely strained GN Bank’s operations, making it impossible to maintain normal business activities. Nduom’s allegations paint a picture of a targeted effort to undermine GN Bank’s position in the market, potentially to clear the way for foreign competitors.

Impact on local economy and calls for regulatory reform

The collapse of GN Bank has had significant repercussions on Ghana’s local economy. GN Bank was known for its focus on supporting small and medium-sized enterprises (SMEs) and providing financial services to underserved communities. Its demise has left a void in the market, affecting thousands of businesses and individuals who relied on its services.

Nduom’s claims have ignited a broader debate about the fairness and transparency of Ghana’s financial regulatory framework. There are growing calls from various stakeholders, including business leaders, economists, and policymakers, for a thorough investigation into the Bank of Ghana’s practices. Many argue that the incident highlights a systemic bias against local businesses and emphasises the need for reforms to protect indigenous enterprises from similar fates.

Nduom has urged for an independent audit of the Bank of Ghana’s evaluation processes to ensure that no other indigenous bank suffers the same fate as GN Bank. He believes that only through transparency and accountability can confidence in the banking sector be restored. This case, he argues, should serve as a catalyst for a more equitable and supportive environment for local banks and businesses.

Future of indigenous banking in Ghana

The controversy surrounding GN Bank’s collapse has put a spotlight on the broader challenges faced by indigenous banks in Ghana. Despite their crucial role in supporting local economies, these banks often struggle against regulatory frameworks perceived to favor larger, foreign-owned institutions. Nduom’s battle for justice is seen by many as a fight for the survival and prosperity of local entrepreneurship.

As the story continues to develop, it is clear that the implications of GN Bank’s collapse extend far beyond a single institution. It has become a symbol of the struggles faced by indigenous businesses in a globalised economy. The outcome of this debate could shape the future of banking in Ghana, potentially leading to reforms that ensure a fairer and more supportive landscape for local financial institutions.

As of 2023, Groupe Ndoum, founded by Nduom, is a multinational family holding business of Ghanaian and American origin, comprising more than 60 independent companies across various industries.