BANQUE CENTRALE DE DJIBOUTI

INSTRUCTION N° 2011-03

RELATIVE À LA SOLVABILITÉ DES ÉTABLISSEMENTS DE CRÉDIT

The Governor of the Central Bank of Djibouti,

Having regard to Law No. 118/AN/11/6ème L of January 22, 2011, amending the statutes of the Central Bank of Djibouti;

Having regard to Law No. 119/AN/11/6ème L of January 22, 2011, relating to the establishment and supervision of credit institutions and financial auxiliaries;

Having regard to Decree No. 2011-010/PRE of January 24, 2011, appointing the Governor of the Central Bank of Djibouti.

Orders:

Article 1: Obligation to Maintain a Solvency Ratio

1. Credit institutions, referred to in Article 3 of the aforementioned Law No. 119/AN/11/6ème L, hereinafter referred to as "subject institutions," are required to maintain at all times a minimum ratio, known as the solvency ratio, between the amount of their own funds and that of their global risks.

2. The elements for calculating this ratio are extracted, for each subject institution, from the accounting of its headquarters and that of its agencies located in Djibouti.

Article 2: Calculation of Own Funds

The own funds constituting the numerator of the ratio referred to in Article 1 of this Instruction are defined by Instruction No. 2011-05 of the Governor of the Central Bank of Djibouti.

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Article 3: Calculation of Global Risks

The global risks constituting the denominator of this same ratio include:

• direct exposures;
• advances to other institutions;
• commitments by signature.

These elements are retained after applying the following percentages, and after deducting provisions specifically allocated to their coverage.

1. Risk Representation Percentages

a) Risks Weighted at 0%

• cash and assimilated items;
• claims on the Central Administration or the Central Bank of Djibouti;
• claims on international financial institutions (IMF, World Bank, European Union), multilateral development banks¹, central administrations, or central banks of Category 1 States²;
• assets or off-balance sheet items secured by pledge or equivalent security assignment:
  • of securities issued by a central administration or central bank of a Category 1 State;
  • of a deposit with the lending institution;
  • of deposit certificates or assimilated instruments issued by, and deposited with, the lending institution.

b) Risks Weighted at 20%

• claims on regional or local administrations of Category 1 States, denominated in Djiboutian Francs, US Dollars, or Euros;
• direct claims on credit institutions whose registered office is located in Djibouti or in a Category 1 State, or claims formally guaranteed by them, denominated and financed in Djiboutian Francs, US Dollars, or Euros, with a residual maturity of less than three months;
• values in the process of collection;
• assets secured by pledge or equivalent security assignment of securities, deposit certificates, or assimilated instruments, issued by one of the institutions referred to in paragraphs 1 and 2 of this section;
• off-balance sheet items presenting moderate risk:
  • administrative, customs, or tax bonds;
  • documentary credits secured by goods.

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c) Risks Weighted at 50%

• claims on credit institutions whose registered office is located in Djibouti or in a Category 1 State, with a residual maturity not exceeding one year;
• mortgage claims;
• real estate leasing operations;
• Off-balance sheet items presenting medium risk:
  • guarantees and avals;
  • confirmed credits;
  • forward foreign exchange commitments, etc.

d) Risks Weighted at 100%

All other assets, with the exception of those deducted from the own funds of the subject institution, and notably:

• claims on central, regional, or local administrations, or central banks of Category 1 States, or international financial institutions, but denominated or financed in currencies other than the Djiboutian Franc, US Dollar, or Euro;
• claims on central administrations or central banks of States that are not Category 1 States;
• claims on credit institutions whose registered office is located in Djibouti or in a Category 1 State, with a residual maturity exceeding 1 year;
• claims on credit institutions whose registered office is not located in Djibouti nor in a Category 1 State, with a residual maturity not exceeding 1 year;
• claims on administrations, credit institutions, or customers, once identified as doubtful;
• debtor elements of regularization accounts, without identified counterparties;
• fixed assets;
• assets constituting the own funds of other credit institutions, unless they have been deducted from the own funds of the subject institution in accordance with the provisions of Instruction No. 2011-05 relating to the composition of own funds of credit institutions;
• off-balance sheet items presenting a high degree of risk (acceptances given, guarantees of credits distributed by other credit institutions, etc.).

Article 4: Consideration of Guarantees

When a claim is subject to a guarantee (or pledge of securities), the weighting applicable to the guarantor (or issuer of the securities) substitutes, if more favorable, that relative to the counterparty, provided that the guarantee (or pledge) is direct, unconditional, and of assured legal validity.

When the guarantee (or pledge) is partial, only the portion of the claim covered (pledged) is assigned the reduced weighting.

Furthermore, guarantees are recognized only when they are constituted for a duration at least equal to that of the covered assets.

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Article 5: Power of the Central Bank of Djibouti to Correct Risk Percentages

The Central Bank of Djibouti may refuse or modify the imputation of percentages manifestly unsuitable for certain assets or off-balance sheet commitments.

Article 6: Minimum Solvency Ratio

The minimum value of the solvency ratio is set at 8%. It must reach 10% by December 31, 2012, and 12% by December 31, 2013.

Article 7: Possibility of Setting a Higher Ratio by the Central Bank of Djibouti

When the individual situation of an institution justifies it, the Central Bank of Djibouti may require it to respect a solvency ratio higher than the minimum fixed in Article 6.

Article 8: Possibility of Derogation Granted by the Central Bank of Djibouti

The Central Bank of Djibouti may authorize an institution whose solvency ratio is below the threshold provided in Article 6 at the time of publication of this Instruction to temporarily derogate from it. It sets a deadline for the institution to regularize its situation.

Article 9: Transmission of Form No. 2011-03 Relating to Global Risks

1. In addition to the quarterly regulatory statement of declaration of own funds, provided for in Article 10 of Instruction No. 2011-05 of the Central Bank of Djibouti, which they must produce at the end of March, June, September, and December, subject institutions are required to declare global risks weighted for consideration in calculating their solvency ratio according to the same periodicity, using the standard model attached as an annex.

2. This form is sent to the Central Bank of Djibouti no later than the 20th of the month following the statement date. In the event that this day is a holiday, the form must be transmitted no later than the first business day following.

3. The form appearing in the annex must, for the four submissions indicated in paragraph 1 of this Article, be transmitted both in the form of a paper form, signed by one of the responsible executives of the credit institution, and as a file in Excel format sent by electronic message, according to the procedures fixed by the circular of the Central Bank of Djibouti relating to the procedures for production and transmission of accounting and prudential statements.

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Article 10: Entry into Force of the Instruction

This Instruction of the Central Bank of Djibouti takes effect on its date of publication, with the exception of the provisions of Article 6, for institutions whose declared ratio was less than 8% on June 30, 2011. These institutions must present to the Central Bank of Djibouti, before December 31, 2011, a plan to bring the ratio up to standard by March 31, 2012, at the latest.

Article 11: Repeal of Instruction No. 4/BND/96

Instruction No. 4/BND/96 of the Central Bank of Djibouti concerning the solvency of credit institutions is repealed.

Done in Djibouti, on December 15, 2011

The Governor

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BANQUE CENTRALE DE DJIBOUTI

INSTRUCTION N° 2011-03 RELATIVE À LA SOLVABILITÉ

Name of Credit Institution: ................................................................... Bank Code: ................................................................... Statement Date: ...................................................................

Submission Characteristics	Part to be filled by the institution	Part reserved for the Central Bank of Djibouti
Name of institution
Name of signatory of the form
Functions of the signatory
Statement date of the form
Version number of the form
• 1st version
• Corrected version
Date of signature of the form
Date of receipt
Existence of a file submission
Date and form of file sending	Email

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GLOBAL RISKS I - CALCULATION ELEMENTS (Instruction No. 2011-03)

COMPOSITION (cf instruction, pages 2 and 3)	T			T-1			T-2			T-3
	NET	PERCENTAGE	WEIGHTED VALUE	NET	PERCENTAGE	WEIGHTED VALUE	NET	PERCENTAGE	WEIGHTED VALUE	NET	PERCENTAGE	WEIGHTED VALUE
Cash and assimilated items		0	0		0	0		0	0		0	0
Claims / State and CBD		0	0		0	0		0	0		0	0
Claims / International Financial Institutions		0	0		0	0		0	0		0	0
Claims / Category 1 States & Central Banks		0	0		0	0		0	0		0	0
Assets and commitments by signature secured		0	0		0	0		0	0		0	0
Claims / Regional Administrations of States		20	20		20	20		20	20		20	20
Claims < 3 months / Credit Institutions		20	20		20	20		20	20		20	20
Consortium commitments		20	20		20	20		20	20		20	20
Values in collection		20	20		20	20		20	20		20	20
Assets and commitments by signature secured		20	20		20	20		20	20		20	20
Off-balance sheet commitments with moderate risk		20	20		20	20		20	20		20	20
Claims < 1 year / Credit Institutions		50	50		50	50		50	50		50	50
Mortgage claims		50	50		50	50		50	50		50	50
Real Estate Leasing		50	50		50	50		50	50		50	50
Off-balance sheet commitments with medium risk		50	50		50	50		50	50		50	50
Avals and Guarantees		50	50		50	50		50	50		50	50
Confirmed Credits		50	50		50	50		50	50		50	50
Forward Foreign Exchange Commitments		50	50		50	50		50	50		50	50
Claims / Admin. & Central Banks		100	100		100	100		100	100		100	100
Claims / Credit Institutions		100	100		100	100		100	100		100	100
Claims / Customers		100	100		100	100		100	100		100	100
Fixed Assets		100	100		100	100		100	100		100	100
Participation in Capital of Credit Institutions		100	100		100	100		100	100		100	100
Acceptances Given		100	100		100	100		100	100		100	100
Other Elements		100	100		100	100		100	100		100	100
Total			-			-			-			-

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II - SOLVENCY RATIOS

	T	T-1	T-2	T-3
Own Funds
Weighted Global Risks
Solvency Ratio

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