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Desist from paying dividends to shareholders – BoG tells Banks, SDIs

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The Bank of Ghana (BOG) has directed all banks and Specialized Deposit-Taking 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 to receive dividends from banks and SDIs for the 2019/2020 financial year.

In a statement issued by the Bank’s Secretary, Sandra Thompson, the Central Bank stated that banks and SDIs are barred from making any irrevocable commitments regarding the declaration or payment of dividends to shareholders, until further notice.

The BOG said the decision was taken to ensure that banks and SDIs are better positioned to support their customers throughout the COVID-19 pandemic period.

On March 18, 2020, the BOG directed banks and SDIs to desist from declaring and paying dividends and from making other distributions to shareholders for the 2019 financial year, unless the Bank was satisfied, that such institutions met the regular prudential requirements and were not relying on the additional liquidity released by the regulatory reliefs provided by the Central Bank.

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

The BOG stressed that it will only grant an exception to a financial institution or institutions 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.

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