Notice No. 01/2024 of 21 February on Recovery Plans for Banking Financial Institutions

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PUBLICADO NO DIÁRIO DA REPÚBLICA, I SÉRIE, N.º 35, DE 21 DE FEVEREIRO DE 2024 NOTICE NO. 01/2024 SUBJECT: FINANCIAL SYSTEM - Recovery Plans for Banking Financial Institutions

Whereas it is necessary to establish the additional elements that Banking Financial Institutions must observe in preparing recovery plans, as well as the frequency and procedures regarding their submission, maintenance, and review, aiming to ensure that they are prepared to promptly correct situations of financial imbalance; In accordance with the combined provisions of Article 217 of Law No. 14/21 of 19 May, the General Regime for Financial Institutions, Article 31(1)(f) and Article 98(1), both of Law No. 24/21 of 18 October, the National Bank of Angola Act.

I HEREBY DETERMINE:

CHAPTER I General Provisions

Article 1. (Subject Matter) This Notice establishes the additional elements for preparing recovery plans, as well as the frequency and procedures regarding their submission, monitoring, and review.

Article 2. (Scope) This Notice applies to Banking Financial Institutions under the supervision of the National Bank of Angola, as provided for in paragraph 2 of Article 7 of Law No. 14/21 of 19 May, the General Regime for Financial Institutions.

CONTINUATION OF NOTICE NO. 01/2024 Page 2 of 6 CHAPTER II Submission and Review of Recovery Plans

Article 3. (Submission of Plans)

1. Banking Financial Institutions must annually submit to the National Bank of Angola recovery plans approved by the Board of Directors and duly audited, by 30 June each year, with reference to 31 December of the preceding year.
2. For the purposes of the preceding paragraph, the National Bank of Angola shall define in specific regulations the reporting rules for Recovery Plans.

Article 4. (Exemption from the Duty to Submit Recovery Plans)

1. Banking Financial Institutions may obtain an exemption from submitting Recovery Plans, for which purpose they must submit to the National Bank of Angola, by 30 April each year, a specific and duly justified request.
2. The decision to exempt a Banking Financial Institution from the duty to submit Recovery Plans shall remain valid for one year.
3. Without prejudice to the preceding paragraph, the National Bank of Angola may at any time revoke the exemption decision if it considers that the premises justifying the decision no longer exist.

Article 5. (Review of Recovery Plans)

1. Without prejudice to Article 219 of Law No. 14/21 of 19 May, the General Regime for Financial Institutions, Recovery Plans must be reviewed and, if necessary, updated by Banking Financial Institutions in the following situations:

CONTINUATION OF NOTICE NO. 01/2024 Page 3 of 6 a) When any change occurs in the premises used for their preparation, which may have a relevant impact on the execution of the recovery plan; b) After the occurrence of any event relating to the legal-corporate organization, operational structure, business model, or financial situation of the Banking Financial Institution, which may have a relevant impact on the execution of the Recovery Plan; and, c) Whenever the National Bank of Angola requests it, based on paragraphs a) or b) of this article. 2. For the purposes of paragraph b) of the preceding paragraph, recovery plans must be reviewed within 30 (thirty) days from the date of occurrence of the event.

CONTINUATION OF NOTICE NO. 01/2024 Page 3 of 6 CHAPTER III Additional Elements for Preparing Recovery Plans

Article 6. (Recovery Strategies)

1. Without prejudice to Article 217 of Law No. 14/21 of 19 May, the General Regime for Financial Institutions, the recovery plan must provide a comprehensive set of recovery strategies to address different stress scenarios, encompassing the following premises: a) Strengthening of the capital and liquidity position; b) Disposal of assets; c) Debt refinancing; d) Liability restructuring; e) Access to financial support from entities within the same group, where applicable; f) Access to liquidity financial assistance lines, regardless of the source nature; g) Changes in the corporate or organizational structure, operating strategy, or business model of the Banking Financial Institution; and, h) Maintenance of third-party services necessary for the operational continuity of the Banking Financial Institution.
2. For the purposes of the preceding paragraph, the Recovery Plan must contain a justification of feasibility and an analysis of the expected impact of adopting each recovery strategy, individually and, where applicable, jointly.
3. The recovery strategy must provide measures to reorganize business lines, namely, voluntary liability restructuring through debt-to-equity conversion, possible property sales, or spin-offs or mergers of business units.
4. Banking Financial Institutions must identify potential barriers to the effectiveness of recovery strategies and the risks associated with their execution, as well as actions to eliminate or mitigate them.

Article 7. (Monitoring of the Recovery Plan)

1. Recovery plan monitoring must include indicators and other quantitative and qualitative information that: a) Allow adequate monitoring of risks incurred by the Banking Financial Institution; b) Analyze the magnitude and speed of change in the economic-financial and liquidity situation of the Banking Financial Institution; c) Ensure the timely adoption of recovery strategies; d) Consider the horizon necessary for recovery strategies to take effect; and e) Consider the business model, nature, complexity, and risk profile of the Banking Financial Institution.
2. Monitoring must establish critical levels for the most relevant indicators, aiming to track risks and eventual execution of the recovery plan.

CONTINUATION OF NOTICE NO. 01/2024 Page 4 of 6 Article 8. (Information Management)

1. Banking Financial Institutions must describe in their information management policy how they ensure the provision of information in a prompt and timely manner to enable decision-making during stress situations.
2. Banking Financial Institutions must also describe in their information management policy how they promptly provide the information required by the National Bank of Angola during a crisis situation.
3. For the purposes of the preceding paragraph, information includes, among others, the following: a) Effective intra-group risks through guarantees and intra-group loans, where applicable; b) Effective transactions accounted for on an intra-group basis; c) Effective amount of liquid assets in the parent company and subsidiaries/branches; d) Off-balance-sheet activities; and e) Their major risks concerning other financial institutions and other companies.

CONTINUATION OF NOTICE NO. 01/2024 Page 5 of 6 CHAPTER IV Final Provisions

Article 9. (Sanctions) Non-compliance with the provisions established in this Notice constitutes an administrative offense provided for and punishable under Law No. 14/21 of 19 May, the General Regime for Financial Institutions.

CONTINUATION OF NOTICE NO. 01/2024 Page 6 of 6 Article 10. (Interpretation and Omissions) Doubts and omissions resulting from the interpretation and application of this Notice shall be resolved by the National Bank of Angola.

Article 11. (Entry into Force) This Notice shall enter into force on the date of its publication.

PUBLISHED Luanda, on 23 January 2024. THE GOVERNOR MANUEL ANTÓNIO TIAGO DIAS