Notice No. 07/2024 of 20 December – Operational Rules and Prudential Requirements for Development Banks

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PUBLISHED IN THE OFFICIAL GAZETTE, 1ST SERIES, NO. 242, OF 20 DECEMBER 2024 NOTICE NO. 07/2024 SUBJECT: FINANCIAL SYSTEM − Operational Rules and Prudential Requirements Applicable to Development Banks Whereas Development Banks are institutions relevant to Public Policy, whose purpose is to address market failures in financing needs, whether due to long investment maturation or low profitability, albeit with positive impact and significant externalities in certain sectors; Whereas there is a need to adopt a regulatory framework for Development Banks, to ensure that inclusive growth and sustainable development are not left at the mercy of financial cycle instability; In accordance with the combined provisions of paragraph c) of section 2 of Article 7, and paragraph a) of Article 25, both of Law No. 14/21 of 19 May (General Regime for Financial Institutions), with paragraphs d) and f) of section 1 of Article 31, and sections 1 and 3 of Article 98, both of Law No. 24/21 of 18 October (National Bank of Angola Act). I HEREBY DETERMINE:

CHAPTER I GENERAL PROVISIONS ARTICLE 1. (Object) The present Notice establishes the operational rules and prudential requirements applicable to Development Banks.

CONTINUAÇÃO DO AVISO N.º 07/2024 Página 2 de 9 ARTICLE 2. (Scope) The present Notice applies to Banking Financial Institutions referred to in paragraph c) of section 2 of Article 7 of Law No. 14/21 of 19 May (General Regime for Financial Institutions).

ARTICLE 3. (Definitions) Without prejudice to the definitions provided in Article 3 of Law No. 14/21 of 19 May (General Regime for Financial Institutions), for the purposes of this Notice, the following are understood: a) State Financial Agent – a legal entity acting on behalf of the State, as guarantor or endorser in credit and financing operations provided for in applicable regulations; b) Development Banks – public law legal entities, possessing legal personality, administrative, financial and patrimonial autonomy, with their own assets, of the nature of a public Financial Institution, whose focus is the encouragement and promotion of national economic development; c) Public Company – that which, by legal instrument, is expressly qualified as such and whose capital is wholly held by the State.

ARTICLE 4. (Exclusions) The following provisions do not apply to Development Banks: a) Establishment of mandatory reserves; b) Foreign exchange position limit; c) Resolution regime; and, d) Deposit Guarantee Fund regime.

CONTINUAÇÃO DO AVISO N.º 07/2024 Página 3 de 9 CHAPTER II NATURE OF OPERATIONS ARTICLE 5. (Nature)

1. Development Banks must provide, over the medium and long term, resources necessary for financing programs and projects aimed at promoting Angola's economic and social development, prioritizing the private sector.
2. Without prejudice to the preceding paragraph, whenever financing lines aim at pursuing public policies, Development Banks may finance programs and projects developed directly by the Government.

ARTICLE 6. (Permitted Operations and Activities)

1. Development Banks must carry out banking activities and perform financial operations related to their nature, namely: a) Finance projects aligned with the economic and social development program, mainly those aimed at increasing domestic production and supply of goods and services, promoting national producers in urban and rural areas; b) Invest directly, individually or in partnership with national and foreign entities, in strategic and structuring projects capable of leveraging economic development value chains; c) Promote the application of resources from Public Funds, in accordance with rules established for said Funds; d) Carry out training and capacity-building actions for small and medium-sized enterprises, providing technical assistance;

e) Expand society's productive capacity to support the national economy; f) Finance and foster the export of goods and services; g) Finance education and scientific and technological research projects; h) Finance private projects for social investments, urban services, health, education, sports, food, housing, culture, environment and rural development; i) Promote initiatives to ensure industrialization of the national real economy sector. 2. In carrying out the activities provided for in the preceding paragraph, Development Banks may act as State Financial Agent. 3. Development Banks must conduct adequate technical, economic, financial and legal analysis of the project or undertaking to be benefited, as a preliminary measure before granting financial support. 4. The active and passive operations of Development Banks must be carried out with monetary or foreign exchange correction clauses, as per applicable regulations.

ARTICLE 7. (Foreign Exchange Operations) Development Banks may carry out foreign exchange operations necessary for the exercise of their activities.

ARTICLE 8. (Prohibited Activities) Development Banks are prohibited, under this Notice, from carrying out the following activities: a) Acceptance of deposits;

b) Opening and maintaining accounts for Local Governments; c) Establishment and administration of investment funds; d) Acquisition of real estate not intended for own use; e) Carrying out any other operations in the capital market, as an entity integrated into the national financial system, in accordance with current regulations; f) Participation in share capital, granting of credit and provision of guarantees to any financial institutions, as well as to companies whose object includes real estate brokerage, purchase and sale, operation or administration of real estate.

ARTICLE 9. (Financing Sources)

1. Development Banks may raise financial resources, domestically or abroad, from national or international entities.
2. Regardless of the source of resources, Development Banks may only provide financial support to national projects and citizens residing in the country, provided that the resources to be granted are linked to the execution of projects approved by the bank and whose activities are important for the country's economy.

CHAPTER III GOVERNANCE AND INTERNAL CONTROL SYSTEM ARTICLE 10. (Governance and Internal Control) Development Banks must comply with the specific regulations of Notice No. 01/22 of 28 January regarding the Corporate Governance Code for Banking Financial Institutions, with necessary adaptations.

CHAPTER IV OWN FUNDS REQUIREMENTS ARTICLE 11. (Prudential Requirements) The provisions of Notice No. 08/2021 of 5 July regarding prudential requirements, Own Funds Requirements, Supervision Process and Risk Management, and Market Discipline apply to Development Banks.

ARTICLE 12. (Minimum Own Funds Requirements) Without prejudice to the preceding article, Development Banks must maintain: a) A regulatory own funds ratio (ROR) of 6% (six percent); b) A Tier 1 own funds ratio of 4% (four percent); c) A Common Equity Tier 1 own funds ratio of 2.5% (two point five percent); d) A leverage ratio of 5% (five percent).

CHAPTER V OWN FUNDS REQUIREMENTS BY RISK TYPOLOGY ARTICLE 13. (Market Risk) The trading portfolio activity of Development Banks must not exceed 10% (ten percent) of total assets.

CHAPTER VI OTHER PRUDENTIAL REQUIREMENTS

ARTICLE 14. (Prudential Limits on Large Exposures and Holdings in Non-Financial Companies) Development Banks may not hold, for a period exceeding 5 (five) years, consecutively or intermittently, directly or indirectly, shares or quotas whose value exceeds 25% (twenty-five percent) of the capital of a non-financial company.

ARTICLE 15. (Liquidity Risk) Development Banks must permanently maintain: a) A domestic currency liquidity risk ratio of 10% (ten percent), plus a liquidity conservation reserve of 10% (ten percent); b) A domestic currency monitoring ratio of 100% (one hundred percent), plus a liquidity monitoring reserve of 10% (ten percent); c) A foreign currency liquidity risk ratio of 50% (fifty percent), plus a liquidity conservation reserve of 10% (ten percent); d) A foreign currency monitoring ratio of 150% (one hundred fifty percent), plus a liquidity monitoring reserve of 10% (ten percent).

CHAPTER VII SUPERVISION ARTICLE 16. (Supervision and Information Reporting) Development Banks must report prudential and accounting information as defined by the National Bank of Angola in specific regulations.

ARTICLE 17. (Accounting) Development Banks must record their operations in accordance with the Chart of Accounts for Banking Financial Institutions.

ARTICLE 18. (External Audit) The provisions of Notice No. 12/23 of 4 December 2023 regarding External Audit apply to Development Banks.

ARTICLE 19. (Information System) Development Banks must implement an information and communication system that ensures information is complete, reliable, timely, consistent and understandable, aiming to obtain a comprehensive view of strategy compliance, risk profile, financial situation and market behavior, based on properly parameterized processes for collection, processing and dissemination.

CHAPTER VIII FINAL PROVISIONS ARTICLE 20. (Transitional Provisions) Development Banks currently registered with the National Bank of Angola must comply with this Notice within 90 (ninety) days following its publication.

ARTICLE 21. (Sanctions) Non-compliance with this Notice constitutes an offense provided for and punishable under Law No. 14/21 of 19 May (General Regime for Financial Institutions).

ARTICLE 22. (Doubts and Omissions) Doubts and omissions arising from the interpretation and application of this Notice are resolved by the National Bank of Angola.

ARTICLE 23. (Entry into Force) The present Notice enters into force upon its publication. PUBLISHED. Luanda, 16 December 2024. THE GOVERNOR MANUEL ANTÓNIO TIAGO DIAS