BOLETIM DA REPÚBLICA — OFFICIAL PUBLICATION OF THE REPUBLIC OF MOZAMBIQUE

SUMMARY

NOTICE

The matter to be published in the «Boletim da República» must be submitted as a duly authenticated copy, one per subject, containing, in addition to the necessary details for this purpose, the following endorsement, signed and authenticated: For publication in the «Boletim da República».

IMPRENSA NACIONAL DE MOÇAMBIQUE, E.P.

Bank of Mozambique: Notice No. 7/GBM/2017: Concerning Minimum Capital for Credit Institutions, Financial Companies and Microfinance Operators and revoking Notice No. 4/GGBM/2005 of 20 May.

Notice No. 8/GBM/2017: Approves the Own Funds Regulation for Credit Institutions and revokes Notice No. 14/GBM/2013 of 31 December.

Friday, 2 June 2017 I SERIES — Number 86

BANK OF MOZAMBIQUE

Notice No. 7/GBM/2017

of 2 June

Notice No. 4/GGBM/2005 of 20 May established the minimum capital for credit institutions, financial companies and microfinance operators.

Given the need to update the aforementioned legal instrument and amend the minimum share capital of banks, in order to align it with the increasing risks inherent in their activity and the dynamics of the national economy, the Bank of Mozambique, in exercise of the powers conferred upon it by paragraph 1 of Article 61 of Law No. 15/99 of 1 November – Law on Credit Institutions and Financial Companies, updated by Law No. 9/2004 of 21 July, combined with paragraph a) of Article 28 of Decree No. 57/2004 of 10 December – Microfinance Regulation, determines:

ARTICLE 1

(Minimum share capital) The minimum share capital for credit institutions and financial companies, as well as for the microfinance operators indicated below, shall be as follows: a) Banks ......................................... 1,700,000,000.00 MT b) Financial leasing companies ............ 25,000,000.00 MT c) Investment companies ................... 25,000,000.00 MT d) Venture capital companies ............. 10,000,000.00 MT e) Factoring companies .................... 3,500,000.00 MT f) Fund management companies ............ 700,000.00 MT g) Brokerage financial companies ......... 1,400,000.00 MT h) Brokerage companies ................... 420,000.00 MT i) Asset management companies ........... 700,000.00 MT j) Group purchasing administration companies 700,000.00 MT k) Money exchange offices ............... 2,500,000.00 MT l) Credit cooperatives ................... 200,000.00 MT m) Microbanks: (i) General savings and credit bank ... 5,000,000.00 MT (ii) Economic savings bank ........... 2,400,000.00 MT (iii) Postal savings bank ............ 1,800,000.00 MT (iv) Rural financial savings bank .... 1,200,000.00 MT n) Electronic money institutions ........ 25,000,000.00 MT o) Credit card issuing or management companies 3,500,000.00 MT p) Discount houses ..................... 10,000,000.00 MT q) Microfinance operators subject to monitoring: (i) Savings and loan organizations ... 150,000.00 MT (ii) Microcredit operators ........... 75,000.00 MT (iii) Savings mobilization intermediaries Exempt.

ARTICLE 2

(Compliance period) Banks already established on the date of publication of this Notice must align their share capital to the minimum established in the preceding Article 1, through cash contribution, observing the following deadlines:

Compliance period	New minimum share capital
Up to 1 year after publication of this Notice	570,000,000.00 MT
Up to 2 years after publication of this Notice	1,140,000,000.00 MT
Up to 3 years after publication of this Notice	1,700,000,000.00 MT

ARTICLE 3

(Clarification of doubts) Doubts arising in the interpretation and application of this Notice must be submitted to the Regulation and Licensing Department of the Bank of Mozambique.

550 I SERIES — NUMBER 86

ARTICLE 4

(Revocation) Notice No. 4/GGBM/2005 of 20 May, and all provisions contrary thereto, are hereby revoked.

ARTICLE 5

(Entry into force) This Notice enters into force on the date of its publication. Maputo, 3 April 2017. – Governor, Rogério Lucas Zandamela.

Notice No. 8/GBM/2017

of 2 June

Given the need to align the regulatory capital calculation requirements for credit institutions, the Bank of Mozambique, in exercise of the powers conferred by paragraph d) of paragraph 2 of Article 37 of Law No. 1/92 of 3 January – Organic Law of the Bank, combined with Article 64 of Law No. 15/99 of 1 November – Law on Credit Institutions and Financial Companies, updated by Law No. 9/2004 of 21 July, determines:

Article 1. The Own Funds Regulation for Credit Institutions, attached to this Notice, is hereby approved, forming an integral part thereof. Article 2. This Notice enters into force on the date of its publication. Article 3. Notice No. 14/GBM/2013 of 31 December is hereby revoked. Maputo, 3 April 2017. – Governor, Rogério Lucas Zandamela.

Own Funds Regulation for Credit Institutions

ARTICLE 1

(Scope)

1. This Regulation applies to all credit institutions subject to the supervision of the Bank of Mozambique.
2. The institutions referred to in the preceding paragraph that, in accordance with Articles 3 and 8 of Notice No. 4/GBM/2007 of 2 May, do not prepare their financial statements in accordance with International Financial Reporting Standards (IFRS) shall also apply the provisions of this Regulation with the necessary adaptations.

ARTICLE 2

(Composition of own funds) Own funds shall consist of positive and negative elements, as defined in Articles 3 and 4 of this Regulation.

ARTICLE 3

(Positive elements of own funds)

1. The following shall be considered positive elements of own funds: a) Paid-up capital, including the portion represented by non-redeemable preference shares; b) Share premiums and premiums on other securities; c) Legal, statutory and other reserves formed from undistributed profits; d) Positive profits carried forward from previous financial years; e) Positive profits of the last financial year, under the conditions referred to in paragraph 1 of Article 10; f) Provisional positive profits of the current financial year, under the conditions referred to in paragraph 1 of Article 10; g) Foreign exchange translation and net investment hedging reserves; h) Portion of reserves and profits corresponding to deferred tax assets; i) Elements characterized in Article 11, subject to approval by the Bank of Mozambique; j) Elements characterized in Article 12; k) General credit risk provisions, up to a maximum limit of 0.0125% of credit risk-weighted assets, as provided in Notice No. 11/GBM/2013 of 25 October; l) Reserves arising from the revaluation of tangible fixed assets, carried out in accordance with the authorizing legal instrument; m) Other positive revaluation reserves, for amounts resulting from the application of Article 5 and paragraphs g) and h) of Article 17; n) Other eligible elements, defined in paragraph 5 of Article 5 and without prejudice to Articles 11 and 12; o) Subordinated loans, under the conditions referred to in Article 13; p) Released portion of redeemable preference shares.
2. The elements provided for in paragraphs g), h) and i) of the preceding paragraph shall not apply to credit institutions that do not prepare their individual financial statements in accordance with IFRS, as per Notice No. 4/GBM/2007 of 2 May.

ARTICLE 4

(Negative elements of own funds)

1. The following shall be considered negative elements of own funds: a) Treasury shares, at their book value; b) Other own elements falling under Article 3, at their book value; c) Intangible assets; d) Negative profits carried forward from previous financial years; e) Negative profits of the last financial year; f) Negative profits of the current financial year, at month-end; g) Negative revaluation reserves, under the conditions listed in Article 5; h) Positive revaluation differences under the equity method; i) Amount corresponding to deficiencies in the establishment of provisions, as defined by the Bank of Mozambique, as the positive difference between the amount of regulatory provisions resulting from the application of the discipline established by the Notice on the minimum regulatory provisions regime and the credit impairment value and provisions for off-balance sheet operations resulting from the application of IFRS; j) Amounts of negative actuarial deviations and past service costs associated with post-employment benefits attributed by the entity, which, in accordance with International Accounting Standard 19 (IAS 19) – Employee Benefits, have not been recognized in the financial year's results, carried forward results, or reserves.
2. The provision in paragraph g) of the preceding paragraph shall only apply to institutions that prepare their individual financial statements in accordance with IFRS.

ARTICLE 5

(Elements excluded from own funds)

1. The provisions of this article apply only to institutions that prepare their individual financial statements in accordance with IFRS, which shall also observe the following paragraphs of this article.
2. In determining the elements listed in Articles 3 and 4 of this Regulation, the following shall be excluded: a) Unrealized losses and gains on financial liabilities measured at fair value through profit or loss that represent own credit risk; b) Unrealized gains and losses on cash flow hedges of covered elements measured at amortized cost and future transactions; c) Without prejudice to paragraph e) of this paragraph 2, unrealized gains on loans and other receivables classified as financial assets held for trading or as financial assets at fair value through profit or loss, where applicable; d) Without prejudice to the provision in paragraph e) of this paragraph 2, unrealized gains and losses that do not represent impairment on debt securities, loans and other receivables classified as available-for-sale assets; e) When the assets referred to in paragraphs c) and d) of this paragraph 2 are involved in fair value hedging relationships, only the respective gains, or the gains and losses corresponding to the portion not involved in such hedging relationship and/or the portion of that relationship considered ineffective, shall be excluded.
3. Without prejudice to the exclusions established in paragraph 1, the elements provided for in paragraph m) of paragraph 1 of Article 3 correspond to: a) Unrealized gains on available-for-sale assets, up to 45% of their value; b) Unrealized gains on cash flow hedges of available-for-sale assets, up to 45% of their value (by the amount of the net effect of the hedge).
4. When the unrealized gains referred to in paragraph a) of paragraph 2 of this article occur in assets with impairment recording, the amounts of unrealized gains and impairment shall be treated together for the purposes of applying Articles 3 and 4.
5. The elements provided for in paragraph n) of paragraph 1 of Article 3 and paragraph g) of paragraph 1 of Article 4 correspond, respectively, to the sum of the individual values of unrealized gains and losses of financial instruments, and offsetting between those amounts is not permitted.

ARTICLE 6

(Core and supplementary own funds)

1. The amount corresponding to the sum of the elements indicated in paragraphs a) to h) of paragraph 1 of Article 3, minus the sum of the elements indicated in paragraphs a), c) to j) of paragraph 1 of Article 4, constitutes core own funds.
2. The amount corresponding to the sum of the elements indicated in paragraphs i) to p) of paragraph 1 of Article 3, minus the elements indicated in paragraph b) of paragraph 1 of Article 4, constitutes supplementary own funds.
3. Only for institutions