The Bank of Ghana has directed banks and Specialised Deposit-Taking Institutions (SDIs) to desist from declaring or paying out dividends and from making other distributions to shareholders for the financial years 2019 and 2020.
“The Bank of Ghana now directs that all banks and SDIs desist from declaring or paying any dividends or distributing reserves to shareholders, and from making any irrevocable commitments regarding the declaration or payment of dividends to shareholders, until further notice. For the avoidance of doubt, shareholders in this context means holders of Common Equity Shares (CET1) and Additional Tier I (AT1) capital instruments of banks and SDIs.”
The above statement is contained in notice issued by the Bank of Ghana on 20th April, 2020.
Payment of Dividends- Conditions for exceptions
However, the Bank of Ghana says that it will only grant exceptions to banks and SDIs when it is satisfied that such institutions have met the regular prudential requirements and are not relying on the additional liquidity released by the regulatory reliefs provided by the central bank.
The Bank of Ghana has also indicated that it will continue to monitor the developing impact of the coronavirus pandemic on banks and SDIs and on their customers and that further directives would be issued as and when necessary.
The statement further explained that the directive is meant “to absorb any potential operational losses for banks and SDIs from the COVID-19 pandemic”.
As part of the measures to contain the impact of the Covid- 19 pandemic, the Bank of Ghana permitted the utilisation by banks and Specialised Deposit-Taking Institutions (SDIs) of various capital and liquidity reliefs provided by the central bank.
According to the Bank of Ghana, the decision is to ensure that banks and SDIs are in a better position to support their customers throughout the COVID-19 pandemic period.
On Wednesday, March 18, 2020, the central bank issued a similar directive, asking the banks and SDIs to desist from declaring and paying dividends and from making other distributions to shareholders for the 2019 financial year.
The Bank of Ghana indicated that it would continue to monitor the evolving impact of the pandemic on banks and SDIs and on their customers, and would issue further directives as required.
Attached below is the Bank of Ghana statement.BOG-NOTICE-SUSPENSION-OF-DIVIDEND-DISTRIBUTIONS-1