BoG directs banks, SDIs not to declare dividends to shareholders amid COVID-19 troubles

The Bank of Ghana has directed all banks and Specialized Deposit Institutions (SDIs), to desist from declaring and paying any dividends or distributing reserves to shareholders as the country fights the COVID-19 pandemic.

By this, shareholders are not expected to receive dividend from banks and SDIs for the 2019/2020 financial year.

A press statement issued by the central bank added that banks and SDIs are barred from making any irrevocable commitments regarding the declaration or payment of dividends to shareholders, until further notice.

According the regulator of the financial sector, the decision was taken to ensure that banks and SDIs are better able to support their customers throughout the COVID-19 pandemic period.

It further explained that the aim is “to absorb any potential operational losses for banks and SDIs from the COVID-19 pandemic”.

“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 Bank of Ghana stressed that it will only grant exception to a financial institution (s) only under the condition that such institutions have satisfied and 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 assured that it would continue to monitor the evolving impact of the COVID-19 pandemic on banks and SDIs and on their customers, and would issue further directives as required.

This is one of the many decisions the regulator has taken in the wake of the pandemic to protect banks and their clients as well.