Regulatory Alerts2025-06-04
Instruction No. 59 on Nationally Systemic Financial Institutions
The Central Bank of the Congo issued Instruction No. 59 to establish identification criteria and supplementary prudential measures for nationally systemic financial institutions, including banks, savings banks, microfinance companies, and credit cooperatives. The regulation mandates a 1% additional capital buffer on net risk-weighted assets, phased in over two years, alongside potential supplementary measures such as enhanced liquidity and leverage ratios. Compliance is enforced through an annual review of weighted scoring thresholds, expert discretion for inclusion, and strict adherence to the stipulated prudential standards.
BANQUE CENTRALE DU CONGO
LE GOUVERNEUR
INSTRUCTION N° 59 RELATIVE AUX ETABLISSEMENTS D'IMPORTANCE SYSTEMIQUE AU NIVEAU NATIONAL
The Central Bank of the Congo,
Having regard to Organic Law No. 18/027 of December 13, 2018 on the organization and functioning of the Central Bank of the Congo, particularly Articles 10 and 11;
Having regard to Law No. 22/069 of December 27, 2022 on the activity and supervision of credit institutions, particularly Article 95;
Enacts the following provisions:
TITLE I: OBJECT AND SCOPE
Article 1: This Instruction aims to establish the criteria used by the Central Bank of the Congo to identify nationally systemic financial institutions, as well as the supplementary prudential measures applicable to them.
Nationally systemic financial institutions are entities whose failure or difficulties may significantly affect the financial system and the real economy.
Article 2: This Instruction applies to:
- credit institutions;
- financial companies such as investment or development banks.
TITLE II: IDENTIFICATION OF NATIONALLY SYSTEMIC FINANCIAL INSTITUTIONS
Article 3: The Central Bank of the Congo identifies two (2) categories of nationally systemic financial institutions, namely:
- systemic banks. This category also includes the financial companies referred to in Article 2 of this Instruction;
- other nationally systemic financial institutions. This category includes savings banks, microfinance companies, and savings and credit cooperatives.
Article 4: Credit institutions are identified as nationally systemic based on the following criteria:
- size;
- interconnection with the financial system;
- operational complexity (banks only);
- substitutability for national economic actors.
Article 5: The positioning of each institution against each of the four (4) criteria above is evaluated using indicators that yield a score. The weights applied to each indicator allow for the assignment of an overall score.
Annex 1 of this Instruction presents the selected indicators and applied weights for banks and financial companies. Annex 2 presents the selected indicators and applied weights for other credit institutions.
For a given institution, the score of an indicator is determined by relating its value to the total value of credit institutions considered for each category in accordance with Article 3. The score at the criterion level is obtained by calculating the weighted average of the indicators comprising it.
The overall score of a credit institution is the weighted average of the scores obtained across all criteria.
Article 6: For each category of nationally systemic credit institutions referred to in Article 3, the Central Bank of the Congo sets an overall score level considered as the systemic threshold.
Any institution with an overall score equal to or greater than this threshold is considered systemic.
The Central Bank of the Congo may decide, based on expert judgment, to include a credit institution in the nationally systemic category even if its overall score is below the systemic threshold.
TITLE III: SUPPLEMENTARY PRUDENTIAL MEASURES APPLICABLE TO NATIONALLY SYSTEMIC CREDIT INSTITUTIONS
Article 7: Nationally systemic credit institutions must establish an additional capital buffer aimed at reducing their bankruptcy risk given their importance to the national economy.
For banks, this buffer consists exclusively of ordinary shares and equivalents as defined in Instruction No. 14 of the Central Bank of the Congo on prudential management standards. It is established in addition to the conservation and counter-cyclical buffers applicable to all banks.
For other credit institutions and financial companies, this buffer consists of basic capital elements as defined by the prudential standards regulation applicable to them.
Article 8: The additional capital buffer provided for in Article 7 is set as follows:
- for banks: 1% of net risk-weighted assets as defined in Instruction No. 14 on prudential management standards;
- for other credit institutions and financial companies: 1% of net risk-weighted assets as defined by the regulation applicable to each type of credit institution.
This buffer is phased in over 2 years from the date of notification of the institution as systemic, at a rate of 0.5% per year.
Article 9: The Central Bank of the Congo may impose supplementary prudential measures on nationally systemic credit institutions, in addition to the capital buffer referred to in Articles 7 and 8 of this Instruction, which may specifically cover:
- the liquidity ratio up to 50 percentage points above the standard set by current regulations;
- the leverage ratio;
- stricter risk concentration standards;
- valuation conditions for collateral securing granted loans;
- restrictions on dividend distributions;
- any other measure aimed at safeguarding financial stability.
TITLE IV: FINAL PROVISIONS
Article 10: The Central Bank of the Congo, through its Department responsible for supervising financial intermediaries, annually approves a list of nationally systemic credit institutions based on data certified as of December 31 of the previous year or relating to the preceding fiscal period. This list may be modified during the year based on changes in a credit institution, particularly following a merger.
The Central Bank of the Congo notifies this decision to the concerned institutions.
The list of nationally systemic credit institutions, along with the threshold set forth in Article 6 of this Instruction, is published on the official website of the Central Bank of the Congo.
Article 11: Failure by the institutions referred to in Article 2 to comply with the provisions of Title III of this Instruction exposes violators to sanctions provided by applicable legal and regulatory provisions.
Article 12: This Instruction enters into force on the date of its signature and repeals all prior provisions contrary hereto.
Done at Kinshasa, on JUNE 6, 2023
MALANGU KABEDI MBUYI Governor
Annex 1. Identification Criteria for Systemic Banks
| Criteria | Indicators | Weighting |
|---|---|---|
| Size | Total Assets | 20 % |
| Off-balance sheet items adjusted with conversion factors into credit equivalents in accordance with Instruction No. 14 on prudential management standards | 10 % | |
| Interconnection | Exposures to the financial sector | 15 % |
| Liabilities towards the financial sector | 15 % | |
| Complexity | Trading securities held for trading purposes | 10 % |
| Substitutability | Total customer deposits received | 7,5 % |
| Total loans granted to customers | 7,5 % | |
| Transaction flows through payment systems | 7,5 % | |
| Value of securities held in custody | 7,5 % |
Annex 2: Identification Criteria for Other Nationally Systemic Credit Institutions
| Criteria | Indicators | Weighting |
|---|---|---|
| Size | Total Assets | 40 % |
| Interconnection | Exposures to the financial sector | 15 % |
| Liabilities towards the financial sector | 15 % | |
| Substitutability | Total customer deposits received | 10 % |
| Total loans granted to customers | 10 % | |
| Transaction flows through payment systems | 10 % |