Withdraw directive to banks to stop payment of dividends – BoG told

The Bank of Ghana (BoG) has been asked to reconsider a directive it gave to the banks to stop payment of dividends to shareholders.

The BoG directed banks and Specialised Deposit-Taking Institutions (SDIs) in Ghana not to pay dividends to shareholders for the 2019 and 2020 financial years because of the Coronavirus (COVID-19) pandemic and its effects.

The central bank said the decision was to ensure that banks and SDIs are better able to support their customers throughout the COVID-19 pandemic and to absorb any potential operational losses for banks and SDIs from the COVID-19 pandemic.

A statement signed by the BoG’s secretary, Sandra Thompson said: “In furtherance of the above, and to ensure that banks and SDIs are better able to support their customers throughout the COVID-19 pandemic, to absorb any potential operational losses for banks and SDIs from the COVID-19 pandemic, the Bank of Ghana now directs that all banks and SDIs desist from declaring and/or paying any dividends or distributing reserves to shareholders, and from making any irrevocable commitments regarding the declaration or payment of dividends to shareholders, until further notice.”

But Samuel Bediako-Asante, a financial analyst and the CEO of Sambed Consult, has said this directive from the BoG has come at the wrong time and definitely will have various negative effects on the investing public.

“In the light of the above stated reasons it will be better for the BoG to reconsider its directive or decision to the banks in order for the shareholders of these companies (banks) have their due, and to cushion them financially in a time like this.

“The BoG’s directive would definitely create a vicious circle within the economy and make investments in the country a no-go area taking into account how so many citizens have lost their investments to the collapsed financial institutions post the financial sector clean-up.

“Hope the BoG would listen this time round and take a more humane approach in this matter for shareholders/investors have already suffered too much through losing their investments in the collapsed financial institutions, namely the Microfinance institutions, Savings & Loans Companies, other Asset Management companies, and the delisted former UT Bank.”