More banks may
struggle to pay interim dividends to shareholders despite the permission
granted by the Bank of Ghana following progress made in their recapitalisation
efforts.
Citi Business News has gathered that only nine out of the 23
commercial banks in the country will be able to honour shareholders’
obligations albeit with strong capital positions after the moderation of the
impact of the Domestic Debt Exchange Programme
During the recent Monetary Policy Committee (MPC) press
conference, Dr. Ernest Addison, Governor of the Bank of Ghana, revealed that
banks with stronger capital positions have been permitted to pay interim
dividends.
This decision follows the directive issued to all 23 banks in
the financial sector to suspend the declaration and payment of dividends and
other distributions to shareholders due to the impact of the Domestic Debt
Exchange Programme (DDEP), which eroded banks’ profits.
The banks collectively
held more than 30% of the GH¢83 billion bonds involved in the swap for new
instruments. The reduction in coupon rates and extension of payment terms under
the DDEP have resulted in substantial losses for these lenders.
The new directive allowing dividend payments aims to compensate
investors, especially foreign investors who have suffered losses due to
currency depreciation, for their investments in the banking sector.
However, Citi Business News has learned from anonymous sources
that most indigenous banks may struggle to comply with this directive.
Citi Business News has learned that foreign banks exerted
pressure on the government and central bank to reach this decision during last
year’s IMF and World Bank Group 2023 annual meetings in Marrakech, Morocco.
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