Notice No. 07/21 of May 31 – Prudential Treatment of Moratorium Credits in the Context of the COVID-19 Pandemic

PUBLISHED IN THE OFFICIAL GAZETTE, FIRST SERIES, NO. 103, OF JUNE 4, 2021 NOTICE NO. 07/21 of May 31

SUBJECT: FINANCIAL SYSTEM – Prudential Treatment of Credits Subject to Moratorium in the Context of the COVID-19 Pandemic

Whereas the current context of the COVID-19 pandemic and the response measures, including various forms of population confinement, have had significant economic consequences for business sectors that were required to significantly reduce or even cease their activities, it is urgent to implement support measures for the business sector with the objective of minimizing the economic impact on companies.

Whereas, equally, payment moratoria may be an effective tool to address short-term liquidity difficulties caused by the limitation or suspension of business activities, aiming to promote the adequate granting of moratoria by Banking Financial Institutions to their clients, the Banco Nacional de Angola hereby temporarily adjusts the classification of credit for prudential purposes.

In accordance with the combined provisions of Article 21 and Article 51, both of Law No. 16/10 of July 15, the Law of the Banco Nacional de Angola, and Article 166 of Law No. 14/21 of May 19, the General Regime of Financial Institutions Law.

DETERMINE:

Article 1. (Subject Matter) This Notice establishes the prudential treatment of credits on which Banking Financial Institutions, hereinafter referred to as Commercial Banks, have granted payment moratoria as a result of the COVID-19 pandemic, with the objective of supporting their clients facing temporary liquidity reductions.

Article 2. (Scope) This Notice applies to moratoria granted in response to the effects of the COVID-19 pandemic, under the following terms: a) Those that provide for changes to payment plans through suspension, deferral, or reduction of principal, interest, or both amounts, during a predefined limited period, without altering any other terms and conditions of the credits, including the interest rate; b) On credit contracts in force on the date of the pandemic declaration that were not in default at that time; and, c) For clients operating in sectors that suffered greater impact due to population confinement measures, namely culture, sports, education, transport, catering and similar, hospitality, tourism, and related.

Article 3. (Granting of Moratoria)

1. Clients have 30 (thirty) days from the date of publication of this Notice to request a moratorium.
2. Commercial Banks shall only consider moratorium requests from clients operating in the sectors referred to in the preceding article who, prior to the pandemic declaration, were not in default and demonstrably have favorable prospects for resuming their activities and settling the credit according to the new payment plan to be established.
3. For this purpose, upon receiving a client's request for the granting of a payment moratorium under this Notice, Commercial Banks must conduct a rigorous assessment of the client's repayment capacity after the moratorium ends.
4. Commercial Banks must respond to moratorium grant requests within 30 (thirty) days.
5. Granted moratoria must not exceed a duration of 06 (six) months, which may be extended by the Banco Nacional de Angola if circumstances so determine.

Article 4. (Credit Classification for Moratoria for Prudential Purposes)

1. The approval of a payment moratorium on credit liabilities does not imply the reclassification of the client's exposure as a restructured credit according to Instruction No. 05/2016 of August 8, on Impairment Losses for the Credit Portfolio, or with days of delay in payment, under Notice No. 11/2014 of December 17, on Specific Requirements for Credit Operations.
2. For the purposes of Article 6 of Notice No. 11/2014 of December 17, Commercial Banks may maintain the credit at the risk level assigned on the date of the pandemic declaration, without considering days of delay.
3. For the purposes of Instruction No. 05/2016 of August 8, on Impairment Losses for the Credit Portfolio, if the granting of the moratorium under this Notice is not classified as a restructuring due to financial difficulties, these credits must not be identified and marked as restructured or in default for prudential purposes.
4. During the validity period of the moratorium, Commercial Banks must continue to regularly assess the client's financial situation with the objective of identifying elements indicative of changes in their situation or the market that may determine an increase in default risk under the newly established payment plan, and must in such cases adjust the credit classification to adequately reflect the risk.

Article 5. (Validity Period) This Notice remains in force for a period of 08 (eight) months, counted from its entry into force.

Article 6. (Sanctions) Non-compliance with the rules established in this Notice constitutes an offense punishable under Law No. 14/21 of May 19, the General Regime of Financial Institutions Law.

Article 7. (Doubts and Omissions) Doubts and omissions arising in the interpretation and application of this Notice are resolved by the Banco Nacional de Angola.

Article 8. (Entry into Force) This Notice enters into force on the day following its publication.

PUBLISH. Luanda, May 31, 2021. THE GOVERNOR JOSÉ DE LIMA MASSANO