Dr Ernest Addison
THE BANK of Ghana (BoG) has directed banks and specialised deposit-taking institutions (SDIs) in the country to suspend dividend payments and hold onto the cash, which may be needed in the coronavirus (Covid-19) crisis.
It also wants the banks and SDIs to desist from distributing reserves to shareholders, as well as making any irrevocable commitments regarding the declaration of dividends until further notice.
In a notice signed by its secretary, Sandra Thompson, the central bank explained that the shareholders, in this context, referred to holders of common equity shares (CETI) and Additional Tier 1 (AT1) capital Instruments of banks and SDIs.
It referred to the BoG’s Monetary Policy release dated March 18, 2020 which detailed measures to contain the impact of the Covid-19 pandemic and to the bank’s subsequent notice No: BG/GOV/SEC/202/01 on the permitted utilization by banks and SDIs of various capital and liquidity reliefs provided by the BoG.
The BoG said the banks and SDIs should not avert from the said notices urging them to desist from declaring and paying dividends and from making other distributions to shareholders for the 2019 financial year until it was satisfied, that such institutions had met the regular prudential requirements and were not relying on the additional liquidity released by the regulator.
The central bank 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.
By Ernest Kofi Adu