Coronavirus: Bank of Ghana directs banks to seek approval before payment of dividends

The move, according to the central bank, is to prevent banks from using funds from the reduction in the Bank’s reserve requirements and the conservation buffer.

This also forms part of the BoG’s efforts to combat the economic impact of the coronavirus, cut its benchmark interest rate by 150 points, announced a reduction in the Banks’ reserve requirements to eight per cent from 10 per cent and also lowered the conservation buffer to 1.5 per cent from three per cent, which effectively cut the capital-adequacy ratio to 11.5 per cent from 13 per cent.

Bank of Ghana said this in a press statement issued to universal banks and Specialised Deposit-Taking Institutions operating in the country.

In the statement, BoG said, “Banks and specialized deposit-taking institutions are to refrain from declaring and paying dividends or making other distributions to shareholders for the 2019 financial year unless the Bank of Ghana is satisfied that the institution is not relying on the additional liquidity released by the policy measures.”

It further asked the banks to comply and not to use liquidity gained from the eased capital rules to buy government securities and warned that failure could lead to sanctions.

“The Bank of Ghana shall monitor banks and SDIs’ financial dealings on a weekly basis, to ensure full compliance with the above directives. Failure to comply with this Notice shall attract sanctions in accordance with the relevant provisions of the Bank and Specialised Deposit-Taking Institutions Act,” the statement added.

Coronavirus: Bank of Ghana directs banks to seek approval before payment of dividends

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