COBAC Regulation R-2009/03 on the Organization and Operation of the Central African Deposit Guarantee Fund

COBAC REGULATION R-2009/03 RELATING TO THE ORGANIZATION AND OPERATION OF THE CENTRAL AFRICAN DEPOSIT GUARANTEE FUND

Having regard to the Treaty establishing the Central African Economic and Monetary Community (CEMAC) and its various annexes;

Having regard to the Convention of October 16, 1990, establishing the Central African Banking Commission (COBAC);

Having regard to the Convention of January 17, 1992, on the Harmonization of Banking Regulation in the States of Central Africa;

Having regard to Regulation N°01/109/CEMAC/UMAC/COBAC dated April 20, 2009, establishing the Central African Deposit Guarantee Fund;

TITLE I GENERAL PROVISIONS

Article 1. This Regulation has the following objectives: to determine the conditions and limits of the Guarantee Fund's intervention, notably the contribution amounts of credit institutions and the methods for compensating beneficiaries of the guarantee; to establish the conditions for the management of the Fund; to clarify the conditions for the Fund's preventive intervention with credit institutions.

Article 2. The provisions of this Regulation apply to credit institutions operating, under any form whatsoever, in the territory of the States of the Central African Economic and Monetary Community (CEMAC) and subject to the supervision of the Central African Banking Commission (COBAC).

Article 3. In the event of unavailability of deposits and other eligible assets as determined by COBAC, as mentioned in Article 5 of Regulation N°01/109/CEMAC/UMAC/COBAC, the Fund shall reimburse their holders under the conditions and according to the modalities indicated in this Regulation.

Article 4. Deposits are considered unavailable when funds placed with a credit institution cannot be returned or reimbursed to their holders according to the clauses of the contract binding the two parties, due to the situation of that credit institution, and when circumstances do not allow for reimbursement within the shortest possible time. The unavailability of deposits entrusted to a credit institution that is part of a network with banking structures established in several CEMAC States is assessed by the Banking Commission on a consolidated basis.

TITLE II OPERATING PROCEDURES OF THE FUND'S BODIES

Article 5. The decision-making body of the Fund is the Management Committee.

Article 6. Deliberations of the Management Committee are taken by a majority of members present or validly represented. In the event of a tie, the President's vote is decisive. The Internal Regulations define other deliberation modalities of the Management Committee.

Article 7. The Management Committee may delegate powers to its members or any other person for the execution of its decisions.

Article 8. The day-to-day management of the Fund is ensured by a Permanent Secretariat, whose organization and operating modalities are specified by the Management Committee.

Article 9. Charges related to the day-to-day management of the Fund are financed from its resources.

Article 10. The Permanent Secretariat of the Fund prepares annually a balance sheet and income statement for the Management Committee. It also sends the Management Committee a summary statement of its situation every quarter. The Fund publishes an annual activity report transmitted to the members of the Management Committee and the participants in the Guarantee Fund, and communicated for information to the UMAC Ministerial Committee.

Article 11. The budget of the Permanent Secretariat of the Fund is determined by the Management Committee. The budget surplus of the Permanent Secretariat of the Fund is transferred to the Fund's intervention reserves according to the modalities defined in the Financial Regulation.

Article 12. The control of the financial situation, annual accounts, and regularity of operations to be noted in the annual accounts of the Fund is entrusted to an Auditor appointed and removable by the Management Committee, upon the conforming opinion of the Banking Commission.

TITLE III FINANCIAL RESOURCES OF THE FUND

CHAPTER I PRINCIPLE OF CONTRIBUTIONS BY CREDIT INSTITUTIONS

Article 13. Credit institutions constitute an intervention reserve with the Fund, the regular resources of which come from ordinary annual contributions paid by these institutions, calculated based on the total deposits collected by them as well as the outstanding amount of doubtful debts net of provisions.

Article 14. The Fund's Management Committee may call for supplementary contributions within the limit of two fiscal years, when the Fund's liquidity is insufficient to carry out an intervention.

Article 15. The amount of annual contributions cannot be less than 30 million CFA francs per credit institution.

Article 16. Contributions cease to be payable when the Fund's resources reach a level deemed satisfactory by the Management Committee after the opinion of the Banking Commission.

CHAPTER II METHOD OF CALCULATION OF CONTRIBUTIONS BY CREDIT INSTITUTIONS

Article 17. The annual contribution of each participant is equal, for the first two years, to 0.15% of the deposits collected, to which is added 0.05% of doubtful debts net of provisions.

Article 18. From the third year following the effective implementation of the Fund, credit institutions must pay an annual contribution corresponding to 0.20% of the outstanding deposits, to which is added 0.05% of doubtful debts net of provisions.

Article 19. When, due to delays or weaknesses in the submission by credit institutions of the information necessary for the calculation of the deposit base, this cannot be obtained from reliable information fixed at the scheduled date, the base calculated for the previous deadline is increased by 10% per deadline for the fraction of the gross base less than 100 million CFA and by 5% beyond that. However, if the institution justifies force majeure reasons that prevented the regular submission of necessary information, the deposit base is the average of the three previous bases.

Article 20. The Fund may call for supplementary contributions from credit institutions when the Fund's intervention capacity is insufficient to face a disaster of significant magnitude, subject to the provisions of Articles 14 and 15 of this Regulation. The amount of the supplementary contribution corresponds, for one year, to the amount of the ordinary contribution paid during the same year.

Section III - Contributions of new participants to the deposit guarantee mechanism

Article 21. New participants must pay, before the start of their activities, an entry fee calculated based on the discounted value of the Fund, according to modalities defined by the Management Committee after the conforming opinion of the Banking Commission.

CHAPTER III SPECIFIC PROVISIONS FOR CREDIT INSTITUTIONS NOT COLLECTING DEPOSITS ELIGIBLE FOR THE CENTRAL AFRICAN DEPOSIT GUARANTEE FUND

Article 22. When a credit institution does not collect deposits or collects deposits of a nature not to be covered by the Guarantee Fund in the event of a disaster in accordance with the provisions of Articles 5 and 6 of Regulation N°01/09/CEMAC/UMAC/COBAC, it must pay a minimum annual contribution of 5 million CFA francs to this Fund.

CHAPTER IV NOTIFICATION AND PAYMENT OF CONTRIBUTIONS

Article 23. The Permanent Secretariat of the Fund carries out all calculations provided for by this Regulation, based on data fixed on December 31 and certified by the Auditors of the credit institution.

Article 24. The Permanent Secretariat of the Fund establishes and notifies credit institutions and the BEAC, before March 31 of each calendar year, the collection notices for contributions. These notices are transmitted to credit institutions by simple letter for the amount of contributions they owe and are accompanied by the elements used for their calculation.

Article 25. Any credit institution may request the Permanent Secretariat of the Fund to revise the amount of its contribution, within a period of one (01) month from receipt of the notification. The Permanent Secretariat of the Fund may also rectify this amount, during the five years following the payment of the contribution, based on elements brought to its knowledge subsequent to the date of transmission of the amounts, after having received the observations of the institution. Until the Permanent Secretariat of the Fund has rectified this amount, the Fund uses it to recover the contributions due. The Permanent Secretariat of the Fund recalculates the contributions due and imputes the differences on the next deadline.

Article 26. Credit institutions must pay their contributions no later than 15 days after the expiration of the period mentioned in the first paragraph of the previous article.

Article 27. Payment of contributions is made by automatic debit of the accounts of credit institutions opened in the books of the BEAC. To this end, credit institutions must ensure that said accounts have sufficient provision for the realization of the debit operation.

Article 28. The annual contribution of each institution is paid or withdrawn in one installment, into or to the account opened in the name of the Fund in the books of the BEAC. However, the Permanent Secretariat of the Fund may authorize a credit institution or on its behalf, payments or withdrawals in four installments maximum, within a period that cannot exceed one (01) month after the expiration of the payment period provided for by this Regulation.

Article 29. Supplementary contributions must be paid in one installment within a period of 15 days following notification addressed to the institution by simple letter from the Permanent Secretariat of the Fund.

Article 30. The BEAC proceeds, from May 15 of each year, to the automatic debit of the accounts of credit institutions in its books and to the funding of the Fund's accounts to the extent necessary. In the event of insufficient provision, any delay or difficulty in collecting a contribution, the BEAC notifies the Fund and COBAC.

TITLE IV COMPENSATION PROCEDURES

CHAPTER I COMPENSATION CEILING

Article 31. The Fund reimburses assets eligible for deposit protection with a maximum of 5 million CFA francs per beneficiary and per credit institution. However, given particular circumstances and taking into account the importance of the Fund's intervention reserve, the Management Committee may decide, upon the conforming opinion of the Banking Commission and within the framework of a precise compensation procedure, to adjust the reimbursement ceiling.

Article 32. The compensation ceiling applies to all deposits of the same depositor with the same credit institution, regardless of the number of deposits and the location of the institution on national territory, after offsetting with the debts of this depositor. Eligible assets for reimbursement under deposit protection are taken into account up to their principal or nominal value, accrued or pending income, and the value of their possible accessories on the last day preceding the day of the occurrence of deposit unavailability.

Article 33. Deposits in an account on which at least two persons have rights in their capacity as partners of a company, members of an association, or any similar group, not endowed with legal personality, are, for the calculation of the same ceiling, grouped and treated as if they were made by a single depositor. However, if those who can assert rights on the aforementioned assets are identified or identifiable, the share belonging to each of them will be taken into account; in the absence of contrary proof, the shares of the beneficiaries are presumed equal. Assets held in a cash account on the entirety of which at least two persons have rights that can be exercised under the signature of only one of these persons, acting in a capacity other than that of agent, are reimbursed or compensated according to the shares belonging to the persons having rights on these assets; in the absence of contrary proof, the shares of the beneficiaries are presumed equal. Assets registered in accounts opened in the name of professionals not falling under financial professions and exclusively dedicated to the holding and movement of third-party funds are recognized as claims belonging to these third parties only if the accounts are sub-rubricated in the name of these third parties in the accounting of the credit institution in question or if their share is established by the account holder based on communications made during deposits, transfers, and withdrawals. When the depositor is not the beneficiary of the sums deposited in the account, it is the person who is the beneficiary who benefits from the Fund's guarantee, provided however that this person has been determined or is identifiable before the establishment of deposit unavailability. If there are several beneficiaries, the share belonging to each of them is taken into account, in accordance with the provisions governing the management of sums, for the calculation of the ceiling mentioned in Article 31 of this Regulation. If the holder of the assets has debts or obligations towards the credit institution concerned that cannot be subject to the compensation provided for in Article 32, first paragraph of this Regulation, the payment of the intervention is made only after deduction of their amount, unless these debts and obligations are guaranteed by securities deemed sufficient by the Fund, other than the assets for which an intervention is requested.

CHAPTER II LIMITS OF THE FUND'S INTERVENTION

Article 34. If the Fund finds that the liquidity of the deposit guarantee mechanism will not be sufficient to reimburse all deposits and other eligible assets, it proceeds, based on the information it has, in collaboration with COBAC, the Provisional Administrator, the banking liquidator and/or judicial liquidator, to an estimation, on the one hand, of the total amount of compensations that would have to be made and, on the other hand, of the non-recoverable portion of claims on the institution in question.

Article 35. The Fund may defer compensations until it has been able to carry out the estimations provided for in the previous article and, at the latest, until the expiration of the periods fixed in this Regulation.

Article 36. The Management Committee may, after the opinion of the Banking Commission, proportionally reduce compensations to the amount of liquidity of the deposit guarantee system if the amount of these at the date of the occurrence of deposit unavailability is less than the estimated non-recoverable amount of compensations that would have to be made, added to the charges related to compensation. When, following a reduction carried out in accordance with the previous paragraph, the Fund's liquidity at the date of this reduction has not been entirely distributed, the surplus and recoveries compared to the estimates are attributed to holders of eligible assets, without being able to raise total compensations, taking into account the provisions of the following article, beyond the compensation ceiling.

Article 37. The reconstruction of available means of the deposit guarantee mechanism, by the effect of ordinary contributions payments or by the effect of the call for supplementary contributions or the reimbursement of special preventive intervention, serves, by priority, to the complement of compensations that had to be reduced pursuant to the previous article.

CHAPTER III COMPENSATION PROCEDURE

Article 38. In the event of unavailability of deposits and other eligible assets placed with a credit institution, the Banking Commission immediately requests the intervention of the Central African Deposit Guarantee Fund for the reimbursement or restitution to the holders of these deposits and other eligible assets. The unavailability of deposits is established by COBAC at the latest thirty (30) days after having established that a due and payable deposit has not been returned by a credit institution, for reasons that could be linked to its situation or that of its parent company located in the CEMAC and when circumstances do not allow for reimbursement within the shortest possible time.

Article 39. From the documents produced by the credit institution concerned, the Guarantee Fund verifies the claims of depositors relating to unavailable deposits.

Article 40. The Guarantee Fund informs depositors without delay, by registered letter or by any other means leaving a written trace, of the unavailability of their deposits. This letter specifies for each depositor the amount and nature of deposits covered under deposit protection and the claims that are excluded from compensation, in application of the provisions of Articles 5 and 6 of Regulation N°01/09/CEMAC/UMAC/COBAC. It also informs depositors that they have a period of fifteen (15) days to formulate any useful remarks for their compensation or to contest the proposed breakdown. At the end of this period, the Guarantee Fund initiates the settlement of depositors' compensation. The letter mentioned in the previous paragraph specifies to depositors the modalities and procedure to follow in the event of the opening of a collective procedure against the credit institution, to declare before the representative of creditors or the banking liquidator and/or judicial liquidator, the claims that have been excluded from compensation by the Central African Deposit Guarantee Fund.

Article 41. Unless a holder of eligible assets has not been able to assert in time, for legitimate reasons recognized by the Fund, their right to an intervention, the request for intervention must, under penalty of forfeiture, be introduced to the Fund at the latest at the expiration of a period of two (02) months for eligible assets under deposit protection. The period runs from the publication by the Fund of a case of deposit unavailability. The Fund may extend these periods. It publishes its decision according to the same modalities as those provided for in Article 40 above.

Article 42. The Fund compensates in CFA Francs, within a period of two (02) months from the request made by COBAC, the claims admitted by it under the guarantee. When circumstances require it, the Guarantee Fund may request COBAC for an extension of the period fixed in the previous paragraph, which cannot exceed two (02) months. COBAC may, at the request of the Guarantee Fund, grant a maximum of two new extensions, without each of these exceeding two (02) months. The Fund publishes the decision of the Banking Commission according to the same modalities as those provided for above.

Article 43. The Fund may, if the holder does not provide the information necessary for the processing of their reimbursement or compensation request or in case of doubt on the validity of the elements produced in support of said request, suspend the payment of the intervention until the requested information is provided or until proof of the validity of the aforementioned elements is provided.

Article 44. In the event of the opening of a collective procedure against a credit institution whose deposit unavailability was previously established, the Fund may suspend the payment of compensation until the admission of the claim to the liabilities of the banking or judicial liquidation.

Article 45. In the framework of a collective procedure pronounced against a credit institution with which the Central African Deposit Guarantee Fund has intervened, it transmits to the representative of creditors or the banking liquidator and/or judicial liquidator the detail by depositor of the claims compensated by it and those that were not, in application of the provisions of Articles 5 and 6 of Regulation N°01/09/CEMAC/UMAC/COBAC.

Article 46. After any payment made by the Central African Deposit Guarantee Fund, the latter substitutes the compensated client and reclaims, up to the amount of the compensation, the claim rights that the latter holds against the credit institution.

Article 47. The Permanent Secretariat of the Fund makes available to depositors information on the deposit guarantee mechanism, in particular the amount and extent of coverage, the conditions or periods of compensation as well as the formalities to be completed to benefit from a payment under deposit guarantee.

Article 48. The Fund's intervention to proceed with the total or partial reimbursement or compensation of holders of deposits and other eligible assets entails the withdrawal of approval of the credit institution concerned.

CHAPTER IV MODALITIES FOR THE USE OF THE FUND'S RESOURCES

Article 49. In the event of unavailability of deposits and other eligible assets entrusted with a credit institution, the Fund proceeds with their reimbursement by withdrawal operated in the resources lodged in the books of the BEAC, in a proportion it defines based on the extent of the expected compensation.

Article 50. In the event of insufficiency of the Fund's resources, the Management Committee rules on the possibility and modalities of calling for supplementary contributions from credit institutions, under the conditions it defines.

Article 51. When the supplementary resources provided by credit institutions are not sufficient to cover all interventions of the Fund, the latter solicits the State on the territory of which the credit institution concerned is located, with a view to providing the complement of resources necessary for the compensation of depositors and holders of other eligible assets.

Article 52. In the event of use of the Fund's resources lodged in accounts opened in the books of the BEAC, the Management Committee rules on the possibility, amount, and modalities of supplementary contributions from credit institutions necessary for the reconstruction of intervention capacity, in respect of the limits fixed in this Regulation.

TITLE V PREVENTIVE ACTION OF THE FUND

Article 53. The Central African Deposit Guarantee Fund may, upon referral from the General Secretariat of the Banking Commission, provide its assistance to allow the realization of a financial restructuring or a total or partial takeover of the activities of a credit institution whose good performance of commitments is compromised.

Article 54. The preventive intervention of the Fund is carried out on the Fund's resources, within the limits of their available amount, when, deliberating unanimously by the members present, the Management Committee is of the opinion: that the situation of this institution gives rise to fear in the short term of a total or partial unavailability of deposits;