Regulation No. 02/09 Granting COBAC Competence to Conclude Cooperation Agreements with Financial Supervisory Authorities

ECONOMIC AND MONETARY COMMUNITY OF CENTRAL AFRICA

MONETARY UNION OF CENTRAL AFRICA

MINISTERIAL COMMITTEE

REGULATION No. 02/09/CEMAC/UMAC/COBAC

Granting Competence to COBAC for the Conclusion of Cooperation and Information Exchange Agreements with Financial Supervisory Authorities

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THE MINISTERIAL COMMITTEE,

Having regard to the Treaty establishing the Economic and Monetary Community of Central Africa (CEMAC) of 16 March 1994 and its Addendum dated 5 July 1996, particularly Article 12;

Having regard to the Convention of 5 July 1996 governing the Monetary Union of Central Africa (UMAC), particularly Articles 31, 32 and 34;

Having regard to the Convention of 16 October 1990 establishing a Central African Banking Commission (COBAC);

Having regard to the Convention of 17 January 1992 on the harmonization of banking regulation in the Central African States;

Having regard to the adoption by COBAC of the draft CEMAC regulation during its session on 26 November 2008 in Libreville and the mandate given to its President to submit this text to the Board of Directors of the BEAC for a conforming opinion;

Having regard to the conforming opinion of the Board of Directors of the BEAC issued during its meeting on 28 August 2009 in Douala upon the proposal of the Governor of the BEAC;

In its extraordinary session on 28 September 2009 in Paris (France);

Considering that the Basel Committee has established Fundamental Principles for effective banking supervision, in particular fundamental principles 23, 24 and 25 relating to the supervision of cross-border institutions;

That these principles establish the need for close cooperation between the supervisory authorities of each national or regional banking system, which is reflected in particular by information exchange and the conduct of on-site inspections;

Considering however, that beyond promoting a safe and sound national or regional banking sector, it is necessary in the context of growing interconnection and interdependence between banking, stock market and insurance activities, accelerated economic globalization and the international financial crisis, to strengthen the resilience of the entire national or regional financial system through identified multisectoral information transmission mechanisms;

That indeed, the multiplication of systemic risks that can spread from financial products to banking and/or insurance products requires fluid information flow among all supervisory authorities of financial system entities;

Considering that the general objective is to make the supervision framework more effective to ensure CEMAC's financial stability and thereby maintain depositor and creditor confidence;

That it is therefore necessary to ensure that these different authorities can directly and rapidly exchange sensitive information;

Considering that the circulation of information through the representativeness procedure in the deliberative bodies of these intra-CEMAC authorities shows limitations in terms of efficiency;

That the regime under Article 6 of the Convention of 16 October 1990 establishing a COBAC, authorizing cooperation solely with counterparts from third countries, proves unsatisfactory;

That it is therefore necessary to remedy this situation immediately by strengthening the current framework;

ADOPTS THIS REGULATION, THE TEXT OF WHICH FOLLOWS:

REGULATION GRANTING COMPETENCE TO COBAC FOR THE CONCLUSION OF COOPERATION AND INFORMATION EXCHANGE AGREEMENTS WITH FINANCIAL SUPERVISORY AUTHORITIES

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PRELIMINARY TITLE

DEFINITIONS

Article 1: For the purposes of this regulation, the following terms shall mean:

"COBAC": the Central African Banking Commission;

"Credit Institutions": companies as defined by the Convention of 17 January 1992 on the harmonization of banking regulation in the Central African States;

"Financial System": The collective encompassing both banking, stock market and insurance activities;

"Supervisory Authority": the body responsible for supervising one or more of the activities integrated into the financial system.

TITLE I

GENERAL PROVISIONS

Article 2: This regulation aims to facilitate information exchange between the supervisory authorities of financial systems.

TITLE II

INFORMATION EXCHANGES WITHIN CEMAC

Article 3: The Banking Commission is authorized to exchange confidential information with the supervisory authorities of the CEMAC financial system with which it has concluded a cooperation agreement providing for such exchange.

The information thus collected is covered by the professional secrecy in force under the conditions applicable to the communicating body and the receiving body.

The information is intended for the performance of the duties of the receiving authorities and may only be used in accordance with the provisions of the aforementioned cooperation agreement.

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TITLE III

INFORMATION EXCHANGES OUTSIDE CEMAC

Article 4: The Banking Commission is authorized to conclude bilateral agreements with the authorities of a non-CEMAC State responsible for a similar mission, provided that these authorities are themselves subject to professional secrecy, having as their object, cumulatively or not:

1. The extension of on-site inspections to branches or subsidiaries established outside CEMAC by a credit institution, and reciprocally the extension of on-site inspections by counterparts to branches or subsidiaries established within CEMAC by a credit institution established outside CEMAC, within the territory of the counterparts;

2. The performance by COBAC, at the request of its counterparts, of on-site inspections of credit institutions under its supervision in CEMAC that are branches or subsidiaries of credit institutions under the control of its counterparts. These inspections may be carried out jointly with these counterparts;

3. The definition of the conditions under which COBAC may transmit, receive or exchange information useful for the exercise of its powers and those of its counterparts.

Article 5: The Banking Commission is authorized to exchange confidential information with the supervisory authorities of financial systems outside CEMAC, exercising powers comparable to those of other supervisory authorities of the CEMAC financial system, subject to the signing of a cooperation agreement providing for such exchange.

The information thus collected is covered by the professional secrecy in force under the conditions applicable to the communicating body and the receiving body.

The information is intended for the performance of the duties of the receiving authorities and may only be used in accordance with the provisions of the aforementioned cooperation agreement.

TITLE VI

FINAL COMMON PROVISIONS

Article 6: These provisions may be amended by decision of the UMAC Ministerial Committee taken unanimously.

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Article 7: This regulation, which repeals all prior contrary provisions, enters into force upon its signature and is published in the Official Bulletin of the Community.

Paris, 28 September 2009

THE PRESIDENT,

(Signature)

ESSIMI MENYE

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