BoG directs banks to suspend dividend payments
Commercial banks in the country have been directed by the Bank of Ghana (BoG) to suspend dividend payments to shareholders.
The last time the Central Bank took such a decision was in 2020 – during the peak of the Covid pandemic – as the Central Bank tried to contain the impact of pandemic on the banking sector.
The directive disclosed by Professor of Finance at Andrews University, Peprah Williams during an interview on Friday, December 9, 2022, follows the Domestic Debt Exchange Programme (DDEP) announced by the country’s Finance Chief Ken Ofori-Atta on Monday, December 5, 2022.
Professor Williams’ assertion is yet to be corroborated or otherwise by the Bank of Ghana (BoG) as there has been no official statement from the Central Bank to that effect.
Speaking during the interview, Professor Peprah Williams noted that a suspension of dividend payments by banks would improve their liquidity position although the directive is likely to hurt the performance of listed banks on the Ghana Stock Exchange (GSE).
The decision by the Central Bank to suspend dividend payments coupled with a reduction in the liquidity and capital requirements of banks, are aimed at further mitigating the adverse impact of government’s debt exchange programme on the financial sector.
Additionally, some GHS 15bn has been provided through the Financial Stability Fund (FSF) by government and its development partners to further boost the liquidity position of banks and other financial institutions in the country.
DDEP: Gov’t directs financial sector regulators to reduce capital, liquidity requirements for financial firms
Government has directed the various financial regulators in the country – SEC, BoG, NIC and NPRA – to temporarily reduce capital and liquidity requirements for financial firms that decide to participate in the government’s Domestic Debt Exchange Programme (DDEP).
In addition to the reduction in capital and liquidity requirements, regulators of financial institutions are to also suspend any rule or rules that may have an adverse impact on the liquidity or solvency of financial institutions.
The move by government forms part of measures aimed at mitigating the potential severe impact of the DDEP on the operations of banks, specialised-deposit taking institutions, insurance firms, asset management firms, pension funds, collective investment schemes (CIS) among others.
“Financial sector regulators will temporarily reduce regulatory capital and liquidity requirements for regulated firms and schemes that voluntarily participate in the debt operation. Regulators will also suspend or delay any new rules that will have an adverse impact on liquidity or solvency,” read parts of the statement issued by the Bank of Ghana on Wednesday, December 7, 2022.
“Each regulator will communicate more specific reliefs to its regulated firms/schemes in due course,” it added.
