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    BOG Issues Notice on Dividend Distribution by Banks

    April 09, 2021

    The Bank of Ghana, or BOG, issued a notice (BG/GOV/SEC/2020/03) directed to all banks and specialized deposit-taking institutions to desist them from declaring or paying dividends or distributing reserves to shareholders. As per the direction in the notice, banks and specialized deposit-taking institutions shall have to seek prior written approval from BOG before declaring or paying dividends or distributing reserves to shareholders and before making any irrevocable commitments regarding the declaration or payment of dividends to shareholders.

    The criteria to be satisfied for declaration or payment of dividends are: 

    • Compliance with Sections 34 and 35 and all other relevant provisions of the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930)
    • Compliance with the Capital Adequacy Ratio of 13%, Cash Reserve Ratio of 10%, and Non-Performing Loans (NPL) ratio of below industry average at all times
    • Compliance with Section 72 as well as all other relevant provisions on dividend payments, as prescribed under the Companies Act, 2019 (Act 992)
    • Submission of Audited Financial Statements to BOG
    • No existing operational restrictions from BOG by way of Prompt Corrective Actions as per Act 930
    • Stress test results showing the ability of bank to maintain sufficient capital buffers after dividend payment


    Related Link: Notice


    Keywords: Middle East and Africa, Ghana, Banking, Dividend Distribution, Stress Testing, Regulatory Capital, BOG

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