Do not declare dividends to shareholders amid COVID-19 – BoG to Banks and SDIs

Do not declare dividends to shareholders amid COVID-19 – BoG to Banks and SDIs

Dr Ernest Addison - Governor, Bank of Ghana

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 coronavirus pandemic.

Following this directive means that shareholders are not expected to receive a dividend from banks and SDIs for the 2019/2020 financial year.

In a press statement issued by the BoG 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 to 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 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 an exception to financial institutions only under the condition that such institutions have satisfied and met the regular provident requirements and are not relying on the additional liquidity released by the regulatory reliefs provided by the central bank.

Also, the Bank of Ghana has assured continuous monitoring of the evolving impact of the COVID-19 pandemic on banks, SDIs, as well as 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 customers.