Regulatory Alerts2024-12-20
Single Authorization for Credit Institutions in the CEMAC Region (Regulation No. 01/24)
The UMAC Ministerial Committee has adopted Regulation No. 01/24, establishing a single authorization mechanism that allows credit institutions authorized in one CEMAC member state to expand into other member states by establishing branches without redundant administrative procedures. The regulation sets eligibility criteria, including a minimum two-year authorization history and solid financial standing, while mandating prior COBAC approval, defined capital endowments, and strict internal control and anti-money laundering compliance for all branches. It supersedes the 2000 framework, grants a twelve-month transitional period for existing authorized institutions, and takes full effect on 1 January 2025.
COMMUNAUTE ECONOMIQUE ET MONETAIRE DE L'AFRIQUE CENTRALE
UNION MONETAIRE DE L'AFRIQUE CENTRALE
COMITE MINISTERIEL
REGLEMENT N° 01/24/CEMAC/UMAC/COBAC
ON THE SINGLE AUTHORIZATION OF CREDIT INSTITUTIONS IN THE ECONOMIC AND MONETARY COMMUNITY OF CENTRAL AFRICA
THE MINISTERIAL COMMITTEE
Having regard to the Revised Treaty of 30 January 2009 on the Economic and Monetary Community of Central Africa;
Having regard to the Convention governing the Monetary Union of Central Africa;
Having regard to the Convention of 16 October 1990 establishing a Central African Banking Commission, its Annex and subsequent texts;
Having regard to the Convention of 17 January 1992 on the harmonization of banking regulation in Central African States, its Annex and subsequent texts;
Having regard to Regulation No. 02/14/CEMAC/UMAC/COBAC of 25 April 2014 on the treatment of credit institutions in difficulty in CEMAC;
Having regard to Regulation No. 02/15/CEMAC/UMAC/COBAC of 27 March 2015 amending and supplementing certain conditions regarding the exercise of the banking profession in CEMAC;
Having regard to the OHADA Uniform Act on commercial company law and economic interest groups;
Considering the deliberation of the Central African Banking Commission of 14 December 2024 on the draft regulation;
After opinion of the Board of Directors of the Bank of Central African States (BEAC) issued on 19 December 2024, upon proposal of the COBAC President;
In its session of 20 December 2024;
HAS UNANIMOUSLY ADOPTED THE REGULATION, THE TEXT OF WHICH FOLLOWS:
Article 1: This regulation establishes a single authorization for credit institutions in the Economic and Monetary Community of Central Africa (CEMAC).
Article 2: The single authorization confers upon a credit institution that has obtained an authorization in a member State of CEMAC the right, if it wishes, to extend its activity to another member State and establish a branch therein, without being subject to the administrative formalities relating to authorization in that State.
For the purposes of this regulation, a branch is an establishment defined by the OHADA Uniform Act on commercial company law and economic interest groups.
Article 3: Only a credit institution authorized for at least two years may benefit from the single authorization mechanism.
The credit institution referred to in the preceding paragraph must have a solid financial foundation enabling it to comply with all prudential standards issued by COBAC, taking into account the projected situation of the branch.
Furthermore, it must demonstrate its ability to achieve its development objectives under conditions required for depositor security in the country granting initial authorization.
Article 4: The prior authorization request for establishing a branch is submitted to the monetary authority of the host country, against receipt, accompanied by a complete file in two (2) copies, whose composition is determined by COBAC.
If the host country's monetary authority issues a favorable opinion, it transmits to COBAC, within three (3) months of receiving the request, a copy accompanied by one copy of the file for processing. Failure to transmit to COBAC constitutes an unfavorable opinion.
The establishment of a branch by a credit institution in a CEMAC member State under the single authorization regime is subject to prior authorization by COBAC. COBAC has three (3) months from receiving the file transmitted by the monetary authority to render its decision. Any request for supplementary information by COBAC suspends this period until receipt of the requested information.
The decision of COBAC granting or refusing authorization for establishment is notified to the monetary authority of the host country, the monetary authority of the home country, the requesting credit institution, and the National Directorate of the Bank of Central African States (BEAC) of the host country.
Article 5: Branches of credit institutions established under the single authorization regime have a minimum endowment, the amount of which is fixed by COBAC.
COBAC may require the parent credit institution to increase the endowment amount, based on an assessment of the branch's activity volume.
Article 6: Branches established under the single authorization regime exercise their activities in compliance with conditions and limits set by COBAC.
When the total balance sheet of a branch reaches a threshold fixed by COBAC, it requests that the parent institution convert the branch into a subsidiary.
Article 7: The management of a branch is permanently ensured by at least two natural person directors.
Exercising the function of director or deputy director of a branch is subject to a non-objection opinion from the COBAC President.
Article 8: The internal control system of parent credit institutions incorporates the situation of their branches.
Anti-money laundering and counter-terrorist financing diligence obligations applicable to parent credit institutions extend to their branches.
Article 9: The Banking Commission is responsible for ensuring that credit institutions, as owners of branches, comply with legislative and regulatory provisions issued by the UMAC Ministerial Committee, national monetary authorities, the Central Bank, or itself, and for sanctioning observed breaches.
Article 10: Supervision of branches established under the single authorization regime is exercised through document and on-site inspections by COBAC.
The Banking Commission determines the list, content, formats, periodicity, procedures, and deadlines for transmission of documents that these branches are required to submit.
The Banking Commission is authorized to request from branches, their parent credit institutions, and any other person or organization whose assistance may be required, all useful information or supporting documents for the exercise of its mission. Interested parties are obliged to comply with requests addressed to them.
Article 11: The monetary authority exercises administrative control over branches established under the single authorization regime, ensuring they possess COBAC authorization and that their directors have received a non-objection opinion from the COBAC President.
It is authorized, within this administrative control framework, to request from these branches (which are obliged to comply with requests) all useful information or supporting documents for the exercise of the controls provided in this article.
The monetary authority transmits to COBAC the report established at the end of each administrative control conducted in branches under the single authorization regime.
Article 12: The withdrawal of branch establishment authorization is pronounced by COBAC decision, either at the request of the parent credit institution, or on the initiative of COBAC or the monetary authority of the branch's country of establishment.
Article 13: When COBAC identifies malfunctions in the management or control of a branch, it takes safeguarding or restructuring measures provided for by Regulation No. 02/14/CEMAC/UMAC/COBAC/CM of 25 April 2014 on the treatment of credit institutions in difficulty in CEMAC, against the parent credit institution.
The Banking Commission may impose disciplinary and/or financial sanctions on parent credit institutions of branches in case of identified malfunctions in the management or control of its branches.
In such cases, the disciplinary and financial sanction regime applicable to the parent credit institution is that provided for by Regulation No. 02/14/CEMAC/UMAC/COBAC/CM and Regulation No. 01/18/CEMAC/UMAC/COBAC of 21 December 2018 on financial sanctions applicable to natural and legal persons subject to the Central African Banking Commission, and their subsequent texts.
In addition to sanctions provided for in the aforementioned regulations, COBAC may also impose disciplinary withdrawal of branch establishment authorization.
Article 14: The implementation modalities of this regulation will be specified by COBAC regulation.
Article 15: This regulation repeals Regulation No. 01/00/CEMAC/UMAC/COBAC of 27 November 2000 on the establishment of single authorization for credit institutions in CEMAC.
Article 16: This regulation enters into force on 1 January 2025.
Article 17: Credit institutions that benefited from single authorization on the date of entry into force of this regulation have a transitional period of twelve (12) months to comply with its provisions.
Article 18: This regulation is published in the Official Bulletin of the Economic and Monetary Community of Central Africa./-
Libreville, 20 December 2024
The President of the Ministerial Committee,
Mays MOUISSI