Bank of Uganda has suspended bonus and dividend payments as it seeks to reserve enough capital to
support the economy.
In a circular seen by Daily Monitor and signed by Dr Tumubweinee Twinemanzi, the Bank of Uganda (BoU) director supervision, the central bank said it was important that banks and such other firms defer the payment of dividends and bonuses until further notice.
support the economy.
In a circular seen by Daily Monitor and signed by Dr Tumubweinee Twinemanzi, the Bank of Uganda (BoU) director supervision, the central bank said it was important that banks and such other firms defer the payment of dividends and bonuses until further notice.
“Capital reservation to support the
real economy and absorbed losses should take priority over discretionary
distributions like dividend [and] bonus payments. Therefore all
payments of discretionary distributions is deferred until further
notices or until explicit authorisation is given by Bank of Uganda,” he
said in a March 24 circular.
A number of companies, many of which are in the banking sector and listed firms, will be paying dividends to shareholders for the year ended December 31, 2019.
However, it is not yet clear whether the payments will be deferred as instructed by the Central Bank.
A number of companies, many of which are in the banking sector and listed firms, will be paying dividends to shareholders for the year ended December 31, 2019.
However, it is not yet clear whether the payments will be deferred as instructed by the Central Bank.
Mr
Sam Fredrick Mwogeza, the Stanbic chief financial officer, told Daily
Monitor that the results they published with dividend proposed were post
review by Bou. "Given the new directive issued we will engage with BoU
to ensure alignment before any action is taken. We are confident that we
are well-capitalized and hold sufficient liquidity buffers that make us
well situated to support our customers and shareholders in this
difficult time," he said.
Mr George Ochom, the dfcu Bank general manager, told Daily Monitor the board was yet to decide on the dividend payout given that the company’s financial results were yet to be completed by last week.
Mr George Ochom, the dfcu Bank general manager, told Daily Monitor the board was yet to decide on the dividend payout given that the company’s financial results were yet to be completed by last week.
Bank of Uganda has been
working on a number of measures that seek to support the economy that is
already under threat due to Covid-19.
Government has already indicated that the economy is likely to slow down to 5.2 per cent from the earlier projected growth of 6 per cent.
At the weekend, Mr Stephen Kaboyo, the Alpha Capital managing partner, told Daily Monitor that as Covid-19 decimates the broader economy, the central bank has been prescribing measures that will ensure that financial institutions remain liquid to support business continuity.
Government has already indicated that the economy is likely to slow down to 5.2 per cent from the earlier projected growth of 6 per cent.
At the weekend, Mr Stephen Kaboyo, the Alpha Capital managing partner, told Daily Monitor that as Covid-19 decimates the broader economy, the central bank has been prescribing measures that will ensure that financial institutions remain liquid to support business continuity.
“The new
[measure] to defer dividend and bonus payments at this time, in my view
is driven by the urgent need to conserve cash amid dwindling revenues.
On the other hand, it will also deflate pressure on the exchange rate as
most players will have no need to buy dollars to make the cyclical
payments,” he said.
The shilling has been rapidly depreciating mainly due to panic buying and depressed inflows.
The shilling has been rapidly depreciating mainly due to panic buying and depressed inflows.
The
unit, according to Bank of Uganda, closed last week at Shs3,811 after
rapidly depreciating from Shs3,670 about three weeks ago.
The central bank, according to people familiar with the money markets, has in less than three weeks, thrice intervened in the market, injecting about $200m to slow the speed at which the shilling is depreciating.
Dr Twinemanzi also announced other measures, noting that supervised financial institutions must test their business continuity plan, key among them securing customers and staff against Covid-19.
The central bank, according to people familiar with the money markets, has in less than three weeks, thrice intervened in the market, injecting about $200m to slow the speed at which the shilling is depreciating.
Dr Twinemanzi also announced other measures, noting that supervised financial institutions must test their business continuity plan, key among them securing customers and staff against Covid-19.
Central bank adjusts working hours
The central bank also at the weekend changed working hours for banks, credit institutions and microfinance deposit-taking institutions from 9am to 3pm. This is an adjustment from 9am to 4pm. The adjustment is one of the measures through which the central bank is seeking to minimise the spread of Covid-19.
The central bank also at the weekend changed working hours for banks, credit institutions and microfinance deposit-taking institutions from 9am to 3pm. This is an adjustment from 9am to 4pm. The adjustment is one of the measures through which the central bank is seeking to minimise the spread of Covid-19.
Other measures
Permission to close: In the event of suspected Covid-19 infection at a supervised financial institution, the bank or such institution shall immediately notify and seek approval from BoU to have the premise temporarily closed.
Protective gears: Front-facing staff in banking halls and or supervised financial institutions must be availed with appropriate protective gears to minimize the risk of infection.
Minimal staff: Supervised financial institutions must maintain minimal staff to reduce the risk of infection by exposure.
Permission to close: In the event of suspected Covid-19 infection at a supervised financial institution, the bank or such institution shall immediately notify and seek approval from BoU to have the premise temporarily closed.
Protective gears: Front-facing staff in banking halls and or supervised financial institutions must be availed with appropriate protective gears to minimize the risk of infection.
Minimal staff: Supervised financial institutions must maintain minimal staff to reduce the risk of infection by exposure.
moketch@ug.nationmedia.com
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