COBAC Circular Letter LC 25 on Bank Service Pricing

COMMISSION BANCAIRE DE L'AFRIQUE CENTRALE

The President

Yaoundé, July 30, 2008

To the Managing Director

LC - COB/ 25

Subject: Bank Service Pricing

Dear Managing Director,

The Central African Monetary Commission (COBAC), meeting in ordinary session on July 4, 2008, in Brazzaville, has reviewed the conclusions of the survey conducted in April 2008 with credit institutions regarding the structure of bank service pricing within the Central African Economic and Monetary Community (CEMAC).

On this occasion, COBAC noted that interest rates applied across all banking centers in CEMAC remain relatively high. It also observed that certain banks in the Zone continue to fail to comply with existing regulatory requirements in the sub-region, particularly those stipulated in the circular letter from the Governor of the Bank of Central African States dated June 30, 1997, concerning bank service pricing, as well as those related to foreign exchange regulations (maximum commissions levied on international operations, namely: letters of credit, transfers, purchase and sale of foreign currencies, etc.). Furthermore, it regretted the continued collection by certain credit institutions of account maintenance fees for individuals despite the prevailing practice in the Zone of non-interest-bearing current deposits.

Consequently, I request that you comply with the following obligations:

• to eliminate account maintenance fees for individuals in exchange for the prevailing non-interest-bearing current deposits in the Zone;
• and to fully display banking terms and conditions.

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Given the importance I attach to the execution of this decision, please forward to me, at your earliest convenience, the measures you intend to take to comply.

Please accept, dear Managing Director, the assurance of my distinguished consideration.

The President,

(Signature)

Philibert ANDZEMBE

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COMMISSION BANCAIRE DE L'AFRIQUE CENTRALE

General Secretariat P.O. Box 1917 - Yaoundé Republic of Cameroon

TELEX -- BANETAC 8343 KN Tel. (237) 22.23.40.30 (237) 22.23.40.60 FAX. (237) 22.23.82.16

Yaoundé, July 28, 2008

Note to the President of COBAC

Subject: Circular Letter on Bank Service Pricing

Dear Governor,

I have the honor to submit below the revised draft of the circular letter, which incorporates your observations.

Unless you advise otherwise, matters concerning the diversification of business lines among retail banks, asset management activities, and investment financing have not been integrated into the circular letter. I agree with you that these are highly important topics for the Central African Economic and Monetary Community. However, since these matters were not covered by the General Secretariat's survey nor discussed by COBAC during its last ordinary meeting in Brazzaville, they cannot be included in the present circular letter.

Nevertheless, these points and many others will be on the agenda of the tripartite meeting between BEAC, COBAC, and Managing Directors of credit institutions, to be held in Douala in October 2008.

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Furthermore, during its extraordinary session held in Libreville on June 30, 2006, COBAC recommended to the Governor of BEAC, in accordance with Article 34 of the annex to the Convention on the harmonization of banking regulations in the Central African States, to request authorization from the UMAC Ministerial Committee to proceed with drafting a harmonized text aimed at clarifying banking terms applicable to customers and submitting it for the attention of the Monetary Authority in each country.

The resulting draft text draws inspiration from the banking terms framework established by Gabon's 1985 decree. Currently under review at COBAC's General Secretariat, this draft text should be submitted for approval by COBAC during one of its upcoming sessions.

The Deputy General Secretary,

(Signature)

Rafael TUNG NSUE