Regulatory Alerts2024-09-01
On the Ratio between Stable Resources and Long-Term Assets of Credit Institutions
The Bank of the Republic of Burundi issued Circular No. 05/2018 to establish a minimum regulatory ratio of 60% between stable resources and long-term assets for all credit institutions. This directive mandates that banks calculate the ratio using defined components, including global net equity, specific provisions, long-term borrowings, and customer deposits against financial loans, subordinated debt, impaired receivables, and held-to-maturity securities. Effective upon publication on the Central Bank’s website and in the Official Gazette, the circular supersedes the 2014 version and requires formal declarations to be submitted to the Central Bank for compliance monitoring.
BANQUE DE LA REPUBLIQUE DU BURUNDI
THE GOVERNMENT
CIRCULAR NO. 05/2018 ON THE RATIO BETWEEN STABLE RESOURCES AND LONG-TERM ASSETS OF CREDIT INSTITUTIONS, ENACTED PURSUANT TO LAW NO. 1/17 OF AUGUST 22, 2017 GOVERNING BANKING ACTIVITIES
In view of Law No. 1/34 of December 2, 2008 establishing the Statutes of the Bank of the Republic of Burundi, specifically Articles 1 (paragraph 4) and 8;
In view of Law No. 1/17 of August 22, 2017 governing banking activities, specifically Articles 3, 48, 49, 50, 51 and 63;
Having reviewed Circular No. 05/2014 on the ratio between stable resources and long-term assets;
The Bank of the Republic of Burundi, hereinafter referred to as the "Central Bank", enacts:
Article 1: Purpose This circular aims to determine the ratio between stable resources and long-term assets of credit institutions.
Article 2: Regulatory Limit Credit institutions are required to maintain a ratio of at least 60% between stable resources and long-term assets.
Article 3: Stable Resources Stable resources consist of the following elements:
- global net equity as defined by Circular No. 02/2018;
- credit risk provisions recorded in liabilities (excluding provisions related to performing loans);
- provisions for litigation and other risks and charges;
- financial borrowings of 5 years and more;
- debts of 5 years and more represented by securities;
- customer deposits and other time accounts of 5 years and more;
- regulatory reserves for credit risk.
Article 4: Long-Term Assets (Fixed Investments) Long-term assets consist of the following elements:
- financial loans of 5 years and more;
- subordinated loans of 5 years and more;
- net impaired receivables;
- the portion of non-impaired receivables with a maturity of 5 years and more;
- available-for-sale securities of 5 years and more;
- held-to-maturity securities of 5 years and more;
- net miscellaneous values and investments of 5 years and more;
- net fixed securities.
Article 5: Declaration to the Central Bank For the application of this circular, a declaration must be submitted to the Central Bank.
Article 6: Entry into Force This circular replaces Circular No. 05/2014 of September 3, 2018, and enters into force on the day of its publication on the website of the Bank of the Republic of Burundi and in the Official Gazette of Burundi.
Done in Bujumbura, on August 7, 2018
Jean CIZA Governor.
ANNEX TO CIRCULAR NO. 05/2018
Name of the credit institution: Period:
| Description | Amounts |
|---|---|
| A. GLOBAL NET EQUITY | |
| B. PROVISIONS (IMPAIRMENTS) AND RESERVES OF 5 YEARS AND MORE | |
| C. TOTAL STABLE RESOURCES (A+B) | |
| D. LONG-TERM ASSETS (FIXED INVESTMENTS) | |
| E. RATIO BETWEEN STABLE RESOURCES AND LONG-TERM ASSETS (C/D) | |
| Minimum standard | 60% |
| Minimum standard | 60% |
| Minimum standard | Minimum standard |
| Minimum standard | 0% |