“In Chicago, we’re down to one Black-owned bank, GN Bank, and it’s on life support even as we speak,” U.S. Rep. Bobby Rush, a Chicago Democrat, told ProPublica. “It’s one sure sign that the economy in the Black community is fragile at best.”
Rush co-sponsored a bill this year to create an office within the federal Office of the Comptroller of the Currency (OCC) to help Black-owned and community banks. Under the bill, the office will ease regulations to give the banks more flexibility if their “safety and soundness” is not endangered, according to ProPublica.
After closing its only branch location in the Chatham neighborhood, GN Bank was by this summer effectively down to only one branch/office and a handful of staff. Formerly known as Illinois Service Federal Savings and Loan (ISF), the bank was acquired by Dr. Papa Kwesi Nduom from Ghana, who was looking for an opportunity to invest in a Black-owned bank in the United States.
ISF was one of the last Black banks in America but had liquidity challenges. It was established by 13 Black leaders after pooling together $7,000. Their aim and mission were to assist Blacks to buy homes where White-owned banks wouldn’t lend.
Federal regulators signed off on a deal allowing new owners to take control. Ndoum grabbed the opportunity and agreed to put $9 million into it. The bank was restructured so that Nduom, his wife, Yvonne, and four of their adult children controlled all its stock, according to ProPublica. Ndoum’s capital injection did not only see the 80-year institution remain open, but it continued to remain Black-owned.
Since 2001, the number of Black-owned banks in the U.S. has declined. At the turn of the new millennium, there were 41 Black-owned banks, but the number has fallen to just 17. Some of the banks were shut down or were acquired by Whites.
For instance, the First State Bank of Danville, Virginia, ceased to be a Black-owned bank in 2017, when it was bought by a White owner while City National Bank of New Jersey closed in 2019 over liquidity challenges.
Five years after acquiring ISF and renaming it to GN Bank, the fortune of the bank remains precarious. According to ProPublica, the bank under Ndoum has not only closed two of its branches but has cut staff and stopped making new home loans, which is one of its key reasons for existence. Also, the bank has alienated many longtime customers.
The bank, which had so much promise following the capital injection, was again put under restrictions in 2020 after regulators found “new violations of law, rule or regulation”. ProPublica notes that the struggles of GN Bank and other Black-owned banks are part of a large story of racism and economic disparities.
GN Bank’s struggle could also be traced back to the closure of Ndoum’s financial institutions in Ghana. In 2019, Ghana’s central bank and banking regulatory authority, Bank of Ghana, revoked the license of 23 banks, including Ndoum’s bank.
The bank had gone insolvent, and the Bank of Ghana said it was left with no choice but to close it down. In that same year, Ghana’s Security and Exchange Commission shut down the Nduoms’ investment firm, citing its failure to pay investors who wanted to cash out and the “placement of client funds with related parties without proper due diligence and the requisite standard of professional conduct.”
Ndoum is fighting the revocation of his licenses in Ghana’s court. Meanwhile, a 2020 lawsuit alleged that some of the funds taken from customers in Ghana were transferred to International Business Solutions — a Groupe Nduom company in Virginia — before the Nduoms acquired Illinois Service Federal. The lawsuit was brought by representatives of the customers and filed in federal court in Chicago.
“No money of my family’s investment or banking companies abroad were used to purchase ISF,” Nduom told ProPublica.
“I categorically deny recent attempts to smear my name and the name of GN Bank whether in court or otherwise,” the politician cum businessman added. “I believe in what we are doing at GN Bank, I am confident that we have acted lawfully and with the highest integrity and I look forward to GN Bank overcoming these attacks so that we can continue to serve the underserved black and brown community in Chicago.”