Circular No. 97: Ratio of Foreign Currency Loans to Foreign Currency Liabilities

Bank of the Republic of Haiti CIRCULAR No. 97

TO COMMERCIAL BANKS TO SAVINGS AND HOUSING BANKS

Pursuant to Article 43, paragraph a, of the Decree of November 14, 1980, regulating the operation of banks and banking activities on the territory of the Republic of Haiti, the following provisions concerning the ratio between foreign currency loans and foreign currency liabilities enter into force on January 1, 2001.

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1- Definitions

The following definitions apply to this circular:

Foreign Currency Loans Refers to the balance of gross loans (consumer loans, housing loans, commercial loans, etc.), denominated in all currencies other than the gourde, granted by a banking establishment, less authorized deductions.

Authorized Deductions The following may be deducted from foreign currency loans:

• Foreign currency fungible deposits (cash deposits held with the lending banking establishment to guarantee credit risk);
  • Admissible when the funds are held by the lending establishment for the account of the depositor/client under the following conditions:
    • the funds cannot be withdrawn during the duration of the risk;
    • the lending establishment may use the funds to settle the debt to the extent that it is not settled by the client in accordance with the terms of the loan agreement and where no legal provision prevents the use of the guarantee to settle the debt;
  • Admissible when the funds are held by another banking establishment, provided that the latter is located in Haiti or in an OECD country and that the lending establishment obtains written confirmation from the client and another from the banking establishment to the effect that the deposit satisfies the two conditions listed above:
• Foreign currency guarantee letters issued by international institutions headquartered in OECD countries.
• Foreign currency securities issued by the BRH.
• Guarantee letters issued by banks headquartered in OECD countries.
• Securities issued by the governments and central banks of OECD countries in their own currencies.
• Foreign currency guarantee letters issued by the Industrial Development Fund (FDI).

Foreign Currency Liabilities Refers to all elements of the liability denominated in all currencies other than the gourde: deposits (demand, savings, time), bonds (demand and time), other liabilities, and subordinated debentures of a banking establishment.

2- Maximum Ratio

Banking establishments are required to respect at all times a maximum ratio of 50% between the amount of foreign currency loans and that of foreign currency liabilities. The difference should be maintained in immediately available or easily mobilizable accounts.

For the application of this circular, banking establishments are required to convert the amounts of loans and liabilities denominated in "other currencies" into US dollars before calculating said ratio.

3- Foreign Currency Transactions with Affiliated Companies

A banking establishment may not conduct foreign currency transactions with one or more affiliated companies for the purpose of bringing the Ratio of Foreign Currency Loans to Foreign Currency Liabilities below the limit provided for in this circular.

4- Availability of Information for Inspection

During periodic inspections conducted by the BRH, banking establishments must make available at all times to BRH inspectors, in the format most convenient to them, the working file related to the preparation of Compliance Reports on the ratio of foreign currency loans and liabilities.

5- Compliance Reports

Banking establishments must send the following compliance report to the BRH:

• Monthly compliance report on foreign currency loans and liabilities (Annex 1)
• Submission deadline: 15 days following the end of the month.

6- Penalties

Any violation of the limit established by this circular exposes the banking establishment to penalties that will be deducted from the balance of one of its accounts at the BRH. These are calculated based on the excess determined either:

Limit Exceedance

• Following the analysis of compliance reports, when the Bank does not respect the maximum ratio of 50%. The banking establishment is subject to a penalty of 1/10 of 1% of the excess amount per day of exceedance.
• Following an inspection carried out by BRH representatives, when the inspection reveals that the maximum ratio of 50% is not respected between foreign currency loans and foreign currency liabilities. The banking establishment will be subject to a penalty of 1/10 of 1% of the excess amount per day of exceedance.

Availability of Information for Inspection

• Failure to provide the information stated in point 4 of this circular subjects a banking establishment to a penalty of 5,000 gourdes per day of infraction. The penalty period extends from the day of the infraction (request for information by BRH inspectors) until the day the information is made available to BRH inspectors.

Delay in Submission of Compliance Reports

• In accordance with BRH Circular CIR/95#70 in force on the subject.

7- Entry into Force

The provisions of this circular enter into force on January 1, 2001.

Annex

Monthly compliance report on foreign currency loans and liabilities.

Port-au-Prince, September 18, 2000

(Signature) Fritz Jean Governor

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CIRCULAR 97 Annex RATIO FOREIGN CURRENCY LOANS / FOREIGN CURRENCY LIABILITIES MONTHLY COMPLIANCE REPORT (1 of 2)

Banking Establishment: ____________________ As of: ____________________

This MONTHLY COMPLIANCE REPORT certifies the compliance of a banking establishment with the regulatory limit stated in Circular #97

In US Dollars

GROSS LOANS NET OF AUTHORIZED DEDUCTIONS (See annex page 2/2)	(1)
LIABILITIES (See annex page 2/2)	(2)
GROSS LOANS / LIABILITIES (1/2)

Signature of two authorized executives: ____________________ ____________________

Position/Title: ____________________ ____________________

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CIRCULAR 97 Annex RATIO FOREIGN CURRENCY LOANS / FOREIGN CURRENCY LIABILITIES MONTHLY COMPLIANCE REPORT (2 of 2)

	US Dollar	Canadian Dollar converted to US Dollar	French Franc converted to US Dollar	Other Currency converted to US Dollar (specify)	TOTAL in US Dollar
GROSS LOANS
AUTHORIZED DEDUCTIONS
GROSS LOANS NET OF AUTHORIZED DEDUCTIONS					(1)
LIABILITIES					(2)
CONVERSION RATE

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