BOG Issues Guidance for Banks on Capital Utilization During COVID-19
BOG published guidance on the utilization of capital and liquidity releases to banks and specialized deposit-taking institutions, in light of the COVID-19 crisis. Banks and specialized deposit taking institutions are expected to refrain from declaring and paying dividends or making other distributions to shareholders for the financial year 2019, unless BOG is satisfied that the institution meets the regular prudential requirements and is not relying on the additional liquidity released by the policy measures to pay shareholders. All banks and specialized deposit-taking institutions shall, therefore, seek prior approval from BOG before the declaration and payment of dividends.
Banks and specialized deposit-taking institutions should also desist from utilizing the released liquidity based on policy interventions, to purchase the securities of Government of Ghana and BOG. BOG shall monitor weekly the financial dealings of banks and specialized deposit taking institutions, to ensure full compliance with the directives. BOG has put in place this monitoring mechanism to ensure that policy measures introduced by BOG are effective in achieving their stated policy objective. Certain policy measures were introduced to enable banks and specialized deposit-taking institutions to provide more liquidity and financial support to critical sectors of the economy to mitigate the adverse impact of COVID-19 on the Ghanaian economy. The policy measures included:
- Reduction of the Primary Reserve Requirement from 10% to 8% to provide more liquidity to support critical sectors of the economy
- Reduction of the capital conservation buffer for banks from 3.0% to 1.5% to provide the needed financial support to the economy
- Reduction of provisions for loans in the “Other Loans Especially Mentioned” category from 10% to 5% for all banks and specialized deposit-taking institutions as a policy response to loans that may experience difficulty in repayments due to slowdown in economic activity
- Loan repayments that are past due for micro-finance institutions for up to 30 days to be considered as “Current,” as is the case for all other specialized deposit-taking institutions
Related Link: Guidance
Keywords: Middle East and Africa, Ghana, Banking, COVID-19, Dividend Distribution, Regulatory Capital, Credit Risk, CCB, Liquidity Risk, BOG
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
APRA Updates Guidance on Managing Information Security RisksNext Article
BIS Announces Appointment of the New BCBS ChairRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
