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

PUBLISHED IN THE OFFICIAL GAZETTE OF PORTUGAL, SERIES I, NO. 35, OF 21 FEBRUARY 2024 NOTICE NO. 01/2024 SUBJECT: FINANCIAL SYSTEM

• Recovery Plans for Banking Financial Institutions Given the need to establish the additional elements that Banking Financial Institutions must observe when drawing up recovery plans, the periodicity and procedures relating to their presentation, maintenance and revision, to ensure that they are prepared to correct, promptly, situations of financial imbalance; According to the combined provisions of article 217 of Law no. 14/21, of 19 May, Law on the General Regime of Financial Institutions, article 31 (1) (f) and number 1 of article 98, both of Law no. 24/21, of 18 October, the Law of the National Bank of Angola. I HEREBY DETERMINE: CHAPTER I General Provisions Article 1 (Object) This Notice establishes the additional elements for preparing recovery plans, their periodicity, and procedures relating to submission, monitoring, and revision. Article 2 (Scope) This Notice applies to Banking Financial Institutions under the supervision of the National Bank of Angola, provided for in number 2 of article 7 of Law No. 14/21, of 19 May, Law on the General Regime of Financial Institutions.

CHAPTER II Presentation and Revision of Recovery Plans Article 3 (Submission of Plans)

1. Banking Financial Institutions must submit, annually, to the National Bank of Angola, the recovery plans approved by the Board of Directors and duly audited by the 30th of June of each year, in reference to the 31st of December of the previous year.
2. To the effect of the provisions of the preceding paragraph of this article, the National Bank of Angola shall define, in specific regulations, the rules for reporting Recovery Plans. Article 4 (Waiver of the Duty to Submit Recovery Plans)
3. Banking Financial Institutions may obtain an exemption from submitting Recovery Plans and, to that effect, must submit a specific, duly substantiated request to the National Bank of Angola by the 30th of April of each year.
4. The decision to exempt a Banking Financial Institution from complying with the duty to submit Recovery Plans is valid for one year.
5. Without prejudice to the provisions of the previous paragraph of this article, the National Bank of Angola may, at any time, revoke the decision to waive the submission of the Recovery Plans, if it considers that the conditions that motivated the decision are no longer met. Article 5 (Revision of Recovery Plans)
6. Without prejudice to the provisions of article 219 of Law no. 14/21, of 19 May, Law on the General Regime of Financial Institutions, the Recovery Plans must be revised and, if necessary, updated by the Banking Financial Institutions in the following situations:

a) When there is any change in the assumptions used to draw it up, which may have a material impact on the implementation of the recovery plan; b) Following verification of any event related to the legal and 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 so requests, on the basis of paragraphs a) or b) of this article. 2. For the purposes of the provisions of paragraph b) of the previous number of this article, the recovery plans must be reviewed within 30 (thirty) days from the date of the occurrence of the event. CHAPTER III Additional Elements for the Preparation of Recovery Plans Article 6 (Recovery Strategies)

1. Without prejudice to the provisions of article 217 of Law no. 14/21, of 19 May, Law on the General Framework of Financial Institutions, the recovery plan must provide for a comprehensive set of recovery strategies to respond to different stress scenarios, which include the following assumptions: a) Strengthening of the capital and liquidity situation; b) Disposal of assets; c) Debt refinancing; d) Restructuring of liabilities; e) Access to financial support from entities that are part of the same group, if applicable; f) Access to liquidity financial assistance lines, regardless of the nature of the source; g) Changes in the corporate or organizational structure, in the operating strategy or in the business model of the Banking Financial Institution; and,

h) Maintenance of the supply of services provided by third parties, necessary for the operational continuity of the Banking Financial Institution. 2. For the purposes of the preceding paragraph of this article, the Recovery Plan shall contain a statement of reasons for the feasibility and analysis of the expected impact of the adoption of each recovery strategy, individually and, where applicable, of the joint adoption of more than one strategy. 3. The recovery strategy should include measures to reorganize the business lines, namely, voluntary restructuring of liabilities through debt-to-equity conversion, possible real estate sales, spin-off or merger of business units. 4. Banking Financial Institutions should identify possible barriers to the effectiveness of recovery strategies and the risks associated with their implementation, as well as actions to eliminate or mitigate them. Article 7 (Monitoring of the Recovery Plan)

1. The monitoring of the recovery plan shall contain indicators and other quantitative and qualitative information that: a) Allow adequate monitoring of the 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 needed for recovery strategies to take effect; and e) Consider the business model, nature, complexity, and risk profile of the Banking Financial Institution.
2. Monitoring should establish critical levels for the set of most relevant indicators, aiming to monitor the risks and eventual implementation of the recovery plan.

Article 8 (Information Management)

1. Banking Financial Institutions must describe in their information management policy how they ensure the availability of information, quickly and in a timely manner, to allow decision-making in stressful situations.
2. Banking Financial Institutions must also describe in their information management policy how, in a crisis situation, they promptly make available the information that the National Bank of Angola needs.
3. For the purposes of the preceding paragraph of this Article, the information shall include, but is not limited to, the following: a) Intra-group risks realised through guarantees and intra-group loans, if applicable; b) Actual transactions accounted for on an intra-group basis; c) Actual amount of net assets in the parent company and subsidiaries/branches; d) Off-balance sheet activities; and e) Its most significant risks in relation to other financial institutions and other companies. CHAPTER IV Final Provisions Article 9 (Sanctions) Failure to comply with the provisions set out in this Notice constitutes a misdemeanour provided for and punishable under the terms of Law No. 14/21, of 19 May, Law on the General Regime of Financial Institutions.

Article 10 (Doubts and Omissions) Doubts and omissions arising from the interpretation and application of this Notice are settled by the National Bank of Angola. Article 11 (Entry into force) This Notice shall enter into force on the date of its publication. LET IT BE PUBLISHED Luanda, 23rd January 23 2024. THE GOVERNOR MANUEL ANTÓNIO TIAGO DIAS