Circular No. 02/2018 on the Own Funds of Credit Institutions

BANK OF THE REPUBLIC OF BURUNDI

THE GOVERNOR

CIRCULAR NO. 02/2018 ON THE OWN FUNDS OF CREDIT INSTITUTIONS, ISSUED PURSUANT TO LAW NO. 1/17 OF AUGUST 22, 2017 GOVERNING BANKING ACTIVITIES

Having regard to Law No. 1/34 of December 2, 2008 establishing the Statutes of the Bank of the Republic of Burundi, particularly Articles 7 (paragraph 4) and 8;

Having regard to Law No. 1/17 of 2017 governing banking activities, particularly Articles 3, 48, 49, 51 and 63;

Having regard to Circular No. 12/2018 on risk classification and the establishment of provisions by credit institutions;

Having reviewed Circular No. 02/2013 on the own funds of credit institutions;

The Bank of the Republic of Burundi, hereinafter referred to as the "Central Bank", hereby enacts:

Article 1: Purpose

This circular establishes the provisions regarding the composition and calculation of the prudential own funds of a credit institution.

Article 2: Definitions

For the purposes of this circular, the following terms are defined as:

• subordinated loan, a loan whose terms subordinate the repayment of the relevant claim to the full settlement of depositors and other privileged creditors in the event of bankruptcy;
• unrealized gains, the increase in the book value of available-for-sale assets up to 25% of their amount;
• person affiliated with a credit institution, any natural or legal person, or group of related persons, having at least one of the following qualities or relationships with it:
  1. director or executive;
  2. qualified shareholder;
  3. shareholder holding at least 4% of voting rights;
  4. enterprise in which the affiliated person is a shareholder holding at least 10% of voting rights;
  5. any enterprise in which the affiliated person holds at least 25% of voting rights.