BoG grants approval to 11 banks to pay dividend to shareholders
The Bank of Ghana has given approval to 11 out of 23 banks to pay dividends to shareholders in respect of the 2020 financial year.
Following the effects of the covid-19 pandemic, the Central Bank introduced some regulatory measures that include the financial institutions meeting certain key requirements before they could pay dividends to shareholders.
The move was to prevent any pressure on the cedi and the economy as some of these payments were to go to investors outside the country.
Some banks including Ecobank Ghana, GCB Bank and CAL Bank have already paid dividends to shareholders.
Deputy Head of Banking Supervision at the Bank of Ghana, Ismail Adam said at UPSA Law School Quarterly Banking Roundtable webinar that the decision by the Bank of Ghana is to build robustness in the banks, post covid-19.
“The idea is to make the institutions [banks] more robust and resilient such that they wouldn’t suffer because of the pandemic [Covid-19]. So one of the main things we did was to say that we are putting a hold on payment of dividend so that we build enough capital to withstand the shocks that will emanate from the pandemic.”
“But it was not cast in stone. We also said that if you [banks] are meeting certain requirements as we said you will be allowed to pay dividend. So as we speak, 23 banks that we have, I think 11 of them which is almost 50% we have given approval to them to pay some dividend”, he pointed out.
“From our interaction with the board, the issue came up and yesterday I think I made that point somewhere, some [banks] were even threatening to take us to court for infringing on their rights under the Companies Act”, he further stated.
BoG in April 2021 announced strict measures on the payment of dividends by banks
The Bank of Ghana in April announced stringent conditions that banks must meet before they could share part of their profits as dividends to shareholders in respect of the 2020 and 2021 financial years.
The central bank said in a statement that banks wishing to pay dividends for the 2020 and 2021 financial years must show proof of Capital Adequacy Ratio of 13%, cash reserve ratio of 10% and non-performing loans (NPL) ratio of below industry average at all times.
It said BoG’s stress test results on the specific bank must also show that “it will maintain sufficient capital buffers after payment of dividends.”
Source: myjoyonline.com
