Regulatory Alerts2012-04-02
Instruction 10_GR_2012 on the Equilibrium Ratio Between Net Equity and Fixed Assets
The Central Bank of Mauritania issued Instruction 10_GR_2012 to mandate a minimum 100% equilibrium ratio between net equity and fixed assets for all credit institutions. The directive defines the numerator as net equity under existing capital rules, while specifying that tangible fixed assets, retained equity stakes, and net doubtful receivables form the denominator. Credit institutions may request exemptions for active venture capital operations or collateralized properties held within two years, face disciplinary sanctions for non-compliance, and benefit from a two-year transitional grace period.
ISLAMIC REPUBLIC OF MAURITANIA CENTRAL BANK OF MAURITANIA HONOUR-BROTHERHOOD-JUSTICE 01 APR 2012 Instruction No. 10_GR_2012 ON THE EQUILIBRIUM RATIO BETWEEN NET EQUITY AND FIXED ASSETS
The Governor of the Central Bank of Mauritania: having regard to Law No. 73.118 of May 30, 1973 establishing the Central Bank of Mauritania having regard to Ordinance No. 004/2007 of January 12, 2007 on the Statute of the Central Bank of Mauritania having regard to Ordinance No. 020/2007 of March 13, 2007 on credit institutions, repealing and replacing Law No. 95.11 of July 17, 1995 having regard to Decree No. 102/2009 of August 13, 2009 appointing the Governor of the Central Bank of Mauritania Decides:
Article 1: Pursuant to Articles 26 and 27 of Ordinance No. 020-2007 of March 13, 2007, this instruction establishes an equilibrium ratio between net equity and fixed assets. Article 2: Credit institutions must maintain at all times a minimum ratio of 100% between net equity, as defined in Article 3, and fixed assets, as defined in Article 4 of this instruction. An exemption from compliance with this ratio may be requested from the Governor of the Central Bank of Mauritania:
- by credit institutions conducting substantial venture capital or equity investment operations;
- to exclude from the denominator calculation defined in Article 4, properties acquired through collateral realization during their first two years of ownership. Article 3: The net equity retained in the numerator of the ratio is defined by the instruction establishing minimum capital and rules for calculating net equity. Article 4: The fixed assets retained in the denominator of the ratio include the following elements:
- net fixed tangible assets (net intangible fixed assets are deducted in the calculation of net equity),
- net equity stakes (excluding net equity stakes in credit institutions, which are deducted in the calculation of net equity),
- doubtful and disputed receivables net of allocated provisions.
1 Article 5: Failure to comply with the minimum ratio set by this instruction exposes credit institutions to disciplinary sanctions provided for in Ordinance No. 020-2007 and Instruction No. 18/GR/2008. Article 6: The calculation form included in the annex forms an integral part of this instruction. Article 7: These provisions take effect upon signature, subject to the transitional provisions set out in Article 8 below. Article 8: A two-year grace period is granted to credit institutions unable to comply with the provisions of Article 2 of this instruction.
2 Annex to the Instruction CALCULATION OF THE EQUILIBRIUM RATIO BETWEEN NET EQUITY AND FIXED ASSETS In thousands of Ouguiyas Name of the credit institution: RCM Code I. NET EQUITY
- Net equity NET EQUITY RETAINED (A) II. FIXED ASSETS
- Equity stakes and subsidiary shares (B) A218
- Equity stakes and subsidiary shares deducted from net equity (C) A218 EXT
- Equity stakes and subsidiary shares retained (D = B - C)
- Tangible fixed assets (E) A224
- Assets under construction (F) A227
- Retained fixed assets (G = E + F)
- Doubtful and disputed receivables net of allocated provisions (H) A213 NET FIXED ASSETS (I = D + G + H) III. RATIO (J = A / I x 100) Standard: ≥ 100 EXT - extracted from the line
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