Regulatory Alerts2000-03-21
COBAC Regulation R-93/10 Setting the Rules for Minimum Capital Representation of Credit Institutions
The Central African Banking Commission issued Regulation R-93/10 to mandate that all credit institutions and their foreign branches permanently maintain net internal liabilities at or above the statutory minimum capital threshold set by public decree. The regulation defines internal liabilities as paid-up capital, restricted reserves, and assimilable resources, explicitly deducting non-performing items including unpaid capital, treasury shares, brought-forward deficits, pending losses, establishment costs, goodwill, and supplementary provisions. Effective upon signature on 19 April 1993, the rule requires continuous compliance verification and grants the Banking Commission prior approval authority to accept alternative resources meeting specific repayment clauses.
COBAC REGULATION R-93/10 SETTING THE RULES FOR MINIMUM CAPITAL REPRESENTATION OF CREDIT INSTITUTIONS
The Central African Banking Commission, Having regard to the Convention of 16 October 1990 establishing a Central African Banking Commission; Having regard to the Convention of 17 January 1992 on harmonizing banking regulation in the States of Central Africa, Having regard to Article 16 of the annex to the Convention of 17 January 1992; DECIDES
Article 1. Subjected credit institutions must permanently hold a paid-up capital or an allocated fund of at least the amount set by decree by the Public Authorities.
Article 2. For the application of these provisions, every credit institution must at all times demonstrate that its net internal liabilities are equal to or greater than the required minimum capital.
Article 3. Branches and agencies of credit institutions with their head office abroad must also be able to demonstrate at all times the holding of an amount of assets, excluding potential non-performing items, at least equivalent to the required minimum allocation.
Article 4. For the purposes of this regulation, internal liabilities consist of the sum of share capital or allocation, reserves whose distribution is prohibited, and assimilable resources, namely all liability elements that do not constitute debts payable to third parties and are not subject to distribution to shareholders. Resources not meeting the above conditions but accompanied by repayment clauses justifying their assimilation to internal liabilities may be taken into account by credit institutions, subject to prior approval of the Banking Commission.
Article 5. Net internal liabilities equal internal liabilities reduced by non-performing items appearing in the assets of credit institutions. The following are considered non-performing items for the purposes of this regulation: • the unpaid portion of share capital or allocation; • treasury shares held, valued at their book value; • the brought forward deficit, • pending losses awaiting approval, • establishment costs and goodwill; • supplementary provisions and amortizations to be set aside for asset depreciation or non-recovery risks.
Article 6. This regulation, effective as of the date of signature, shall be notified by the Secretary General of the Banking Commission to the Ministers responsible for Finance and Credit and to all approved credit institutions in the States of Central Africa, as well as to professional associations formed among these institutions.
Article 7. The Secretary General of the Banking Commission is responsible for the implementation of this regulation.
Done at Yaoundé, on 19 April 1993 For the Banking Commission, The President, Jean-Félix MAMALEPOT