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1992-07-20

Notice No. 4/92

The National Bank of Angola issued Notice No. 4/92 to mandate that all domestic and foreign banking institutions establish minimum provisions for overdue credit and general credit risks. The regulation classifies overdue credit into five risk tiers based on delinquency duration and requires institutions to apply specific minimum provision percentages ranging from 10% to 100% depending on the risk class and collateral status. Additionally, the notice establishes a baseline 2% provision rate on total credit exposure, exempts certain sovereign and international entities from these requirements, and mandates immediate compliance upon issuance.

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NOTICE NO. 4/92 JULY 20 With a view to strengthening the solidity of financial institutions and establishing minimum levels for the creation of provisions to cover identified or foreseeable losses on the value of specific credits or other general risks inherent to their activity; Pursuant to the authority granted by Law No. 4/91 of April 20, the National Bank of Angola determines:

    • All financial institutions, whether banking, special credit, or parabanking, as well as branches of foreign institutions, must establish provisions, under the conditions set forth in this notice, to cover the risk of overdue credit and general credit risks.
    • Overdue credit risks are classified, based on the period elapsed since the maturity date or, if applicable earlier, since the date formal payment demand was made to the debtor, into the following classes:
  • Class I - Up to 3 months
  • Class II - More than 3 up to 6 months
  • Class III - More than 6 months up to 1 year
  • Class VI - More than 1 up to 3 years
  • Class V – More than 3 years
    • The extension or renewal of overdue credits only exempts them from the establishment of respective provisions if the existing guarantees have been strengthened or if all overdue interest and charges have been fully paid.
    • Provisions for general credit risks must represent the following minimum percentages of the respective credits, considering the risk classes indicated in item 2 and the existence or absence of guarantees:

RISK CLASSES I II III IV V With guarantee - 10% 25% 50% 100% Without guarantee - 25% 50% 100% 100% 5. – In cases of secured overdue credit, the institutions referred to in item 1 must verify whether the intervention of privileged creditors or the occurrence of other circumstances may result in the guarantee's value being insufficient; if so, the credits must be provisioned according to the percentage for unsecured credits.

  1. – For the purpose of establishing provisions for general credit risks, the total credit granted by the institution will be considered, including that represented by accepted bills, guarantees, and sureties provided, but excluding overdue credit that is subject to provisions under item 4.
  2. – Provisions for general credit risks must correspond to a minimum percentage of 2%.
  3. – The obligations established in item 1 do not cover assets related to the following entities, nor those guaranteed by them, or off-balance sheet operations negotiated on their behalf or with their guarantee: a) Angolan State; b) National Bank of Angola c) Angolan Administrative Public Sector Entities; d) Central Governments and Central Banks of other countries; e) International Banks; f) International Monetary Fund.
  4. – This notice enters into force immediately. Luanda, July 20, 1992.- The Governor SEBASTIÃO BASTOS LAVRADOR
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