COBAC Regulation R-2009/03 on the Organization and Functioning of the Central African Deposit Guarantee Fund

COBAC Regulation R-2009/03 on the Organization and Functioning of the Central African Deposit Guarantee Fund

Having regard to the Treaty establishing the Economic and Monetary Community of Central Africa (CEMAC) and its various annexes; Having regard to the Convention of 16 October 1990 establishing the Central African Banking Commission (COBAC); Having regard to the Convention of 17 January 1992 on the Harmonization of Banking Regulation in the States of Central Africa; Having regard to Regulation No. 01 109/CEMAC/UMAC/COBAC dated 20 April 2009 establishing the Central African Deposit Guarantee Fund;

TITRE I: GENERAL PROVISIONS

Article 1. This Regulation aims to:

• establish the conditions and limits of the Fund's intervention, notably the contribution amounts payable by credit institutions as well as the compensation procedures for beneficiaries of the guarantee;
• establish the management conditions of the Fund;
• specify the intervention conditions of the Fund, on a preventive basis, with credit institutions.

Article 2. The provisions of this Regulation apply to credit institutions operating, under any form whatsoever, within the territory of one or more States of the Economic and Monetary Community of Central Africa (CEMAC) and subject to the supervision of the Central African Banking Commission (COBAC).

Article 3. In the event of unavailability confirmed by COBAC of deposits and other eligible assets referred to in Article 5 of Regulation No. 01 109/CEMAC/UMAC/COBAC, the Fund shall reimburse their holders under the conditions and according to the procedures set out in this Regulation.

Article 4. Deposits are deemed unavailable when funds placed with a credit institution cannot be returned or reimbursed to their holders in accordance with the terms of the contract binding them, due to the situation of that credit institution and when circumstances do not allow for reimbursement within a reasonable timeframe. The unavailability of deposits entrusted to a credit institution that is part of a network with banking structures located in several CEMAC States shall be assessed by the Banking Commission on a consolidated basis.

TITRE II: OPERATIONAL PROCEDURES OF THE FUND'S BODIES

Article 5. The decision-making body of the Fund is the Management Committee.

Article 6. Deliberations of the Management Committee are taken by a majority of members present or validly represented. In case of a tie, the President's vote is decisive.
The Internal Rules define other deliberation procedures of the Management Committee.

Article 7. The Management Committee may delegate powers to its members or any other person for the execution of its decisions.

Article 8. The day-to-day management of the Fund is ensured by a Permanent Secretariat, whose organizational and operational procedures are specified by the Management Committee.

Article 9. Costs related to the day-to-day management of the Fund are financed from its resources.

Article 10. The Permanent Secretariat of the Fund prepares annually a balance sheet and an income statement for the Management Committee. It also submits to the Management Committee, every quarter, a summary statement of its financial position.
The Fund publishes an annual activity report transmitted to the members of the Management Committee and to participants in the Deposit Guarantee Fund, and communicated for information to the UMAC Ministerial Committee.

Article 11. The budget of the Permanent Secretariat of the Fund is determined by the Management Committee.
The budget surplus of the Permanent Secretariat of the Fund is transferred to the Fund's intervention reserves according to procedures defined in the Financial Regulations.

Article 12. The supervision of the financial situation, annual accounts, and regularity of operations to be verified in the Fund's annual accounts is entrusted to an Auditor appointed and removable by the Management Committee, upon the conforming opinion of the Banking Commission.

TITRE III: FINANCIAL RESOURCES OF THE FUND

CHAPTER I: PRINCIPLE OF CONTRIBUTIONS BY CREDIT INSTITUTIONS

Article 13. Credit institutions establish an intervention reserve with the Fund, whose regular resources derive from ordinary annual contributions paid by these institutions, calculated based on the total deposits collected by them as well as the outstanding balance of net doubtful claims.

Article 14. The Fund's Management Committee may call for supplementary contributions within a limit of two financial years, when the Fund's liquidity is insufficient to carry out an intervention.

Article 15. The amount of annual contributions shall not be less than 30 million CFA francs per credit institution.

Article 16. Contributions cease to be payable when the Fund's resources reach a level deemed satisfactory by the Management Committee following the opinion of the Banking Commission.

CHAPTER II: METHOD OF CALCULATION OF CONTRIBUTIONS BY CREDIT INSTITUTIONS

Article 17. The annual contribution of each participant is equal, for the first two years, to 0.15% of collected deposits plus 0.05% of net doubtful claims.

Article 18. From the third year following the effective implementation of the Fund, credit institutions must pay an annual contribution corresponding to 0.20% of outstanding deposits, plus 0.05% of net doubtful claims.

Article 19. When, due to delays or weaknesses in the submission by credit institutions of information necessary for calculating the deposit base, it cannot be obtained from reliable data fixed at the scheduled date, the calculated base for the previous due date is increased by a detailed deduction of 10% for the portion of the gross base below 100 million CFA francs and by 5% beyond that. However, if the institution justifies force majeure reasons that prevented regular submission of necessary information, the deposit base is the average of the three preceding bases.

Article 20. The Fund may call for supplementary contributions from credit institutions when the Fund's intervention capacity is insufficient to cover a large-scale claim, subject to Articles 14 and 15 of this Regulation.
The supplementary contribution amount corresponds, for one year, to the ordinary contribution paid during the same year.

Section III: Contributions of new participants in the deposit guarantee mechanism

Article 21. New participants must pay, before commencing their activities, an entry fee calculated based on the Fund's present value, according to procedures defined by the Management Committee following the conforming opinion of the Banking Commission.

CHAPTER III: SPECIFIC PROVISIONS FOR CREDIT INSTITUTIONS NOT COLLECTING ELIGIBLE DEPOSITS

Article 22. When a credit institution does not collect deposits or collects deposits of a nature not to be covered by the Guarantee Fund in case of a claim, in accordance with Articles 5 and 6 of Regulation No. 01/09/CEMAC/UMAC/COBAC, it must pay a minimum annual contribution of 5 million CFA francs to this Fund.

CHAPTER IV: NOTIFICATION AND PAYMENT OF CONTRIBUTIONS

Article 23. The Permanent Secretariat of the Fund performs all calculations provided by this Regulation, based on data fixed as of 31 December and certified by the statutory auditors of the credit institution.

Article 24. The Permanent Secretariat of the Fund prepares and notifies credit institutions as well as BEAC, before 31 March each calendar year, the collection notices for contributions.
These notices are transmitted to credit institutions by simple letter for the amount of contributions due and accompanied by the elements used in their calculation.

Article 25. Any credit institution may request the Permanent Secretariat of the Fund to revise its contribution amount, within a period of one (01) month from receipt of the notification.
The Permanent Secretariat of the Fund may also rectify this amount, during the five years following payment, based on information brought to its knowledge after the transmission date, after consulting the institution. Until the Permanent Secretariat rectifies this amount, the Fund uses it to recover due contributions. The Permanent Secretariat recalculates due contributions and offsets differences on the next due date.

Article 26. Credit institutions must pay their contributions no later than 15 days after the expiration of the period mentioned in paragraph 1 of the preceding article.

Article 27. Contribution payments are made by automatic debit from credit institutions' accounts held at BEAC. To this end, credit institutions must ensure that said accounts have sufficient provision for the debit operation.

Article 28. The annual contribution of each institution is paid or deducted in a single installment, into or from the account opened in the name of the Fund at BEAC.
However, the Permanent Secretariat may authorize a credit institution or an entity benefiting from it to make payments or deductions in up to four installments, within a period not exceeding one (01) month after the expiration of the payment deadline set by this Regulation.

Article 29. Supplementary contributions must be paid in a single installment within 15 days following notification sent by simple letter from the Permanent Secretariat to the institution.

Article 30. BEAC proceeds, as of 15 May each year, to the automatic debit of credit institutions' accounts in its books and to the corresponding funding of the Fund's accounts.
In case of insufficient provision, any delay or difficulty in collecting a contribution, BEAC notifies the Fund and COBAC.

TITRE IV: COMPENSATION PROCEDURES

CHAPTER I: COMPENSATION CEILING

Article 31. The Fund reimburses eligible assets under deposit protection with a maximum of 5 million CFA francs per beneficiary and per credit institution.
However, given particular circumstances and considering the importance of the Fund's intervention reserve, the Management Committee may decide, upon the conforming opinion of the Banking Commission and within a precise compensation procedure, to adjust the reimbursement ceiling.

Article 32. The compensation ceiling applies to all deposits of a single depositor with the same credit institution, regardless of the number of deposits and the location of the institution within national territory, after offsetting with that depositor's debts.
Eligible assets for reimbursement under deposit protection are considered up to their principal or nominal value, accrued or due income, and the value of any accessories as of the last day preceding the occurrence of deposit unavailability.

Article 33. Deposits in an account where at least two persons have rights as partners of a company, members of an association, or any similar unincorporated group are, for the calculation of the same ceiling, grouped and treated as if made by a single depositor. However, if those who can claim rights over the aforementioned assets are identified or identifiable, each person's share is taken into account; in the absence of contrary proof, beneficiaries' shares are presumed equal. Assets held in a cash account over which at least two persons have rights exercisable under the signature of only one of these persons, acting in a capacity other than as agent, are reimbursed or compensated according to the shares belonging to persons with rights over these assets; in the absence of contrary proof, beneficiaries' shares are presumed equal. Assets registered in accounts opened in the name of professionals not belonging to financial professions and exclusively used for holding and moving third-party funds are recognized as claims belonging to those third parties only if the accounts are sub-subject to the name of those third parties in the accounting records of the concerned credit institution or if their share is established by the account holder based on communications made during deposits, transfers, and withdrawals. When the depositor is not the beneficiary of the sums deposited in the account, it is the person who is the beneficiary that benefits from the Fund's guarantee, provided that this person has been determined or is identifiable before the confirmation of deposit unavailability. If there are multiple beneficiaries, each person's share is taken into account, in accordance with the provisions governing fund management, for calculating the ceiling mentioned in Article 31 of this Regulation. If the asset holder has debts or obligations towards the concerned credit institution that cannot be subject to the offsetting provided in paragraph 1 of Article 32, payment of the intervention is made only after deduction of their amount, unless these debts and obligations are guaranteed by securities deemed sufficient by the Fund, other than the assets for which an intervention is requested.

CHAPTER II: LIMITS OF FUND INTERVENTION

Article 34. If the Fund finds that the liquidity of the deposit guarantee mechanism will not be sufficient to reimburse all deposits and other eligible assets, it proceeds, based on available information, in collaboration with COBAC, the Provisional Administrator, and/or the banking and/or judicial liquidator, to estimate, on the one hand, the total amount of compensations to be made and, on the other hand, the non-recoverable portion of claims against the concerned institution.

Article 35. The Fund may defer compensations until it has carried out the estimations provided in the preceding article and, at the latest, until the expiration of deadlines fixed in this Regulation.

Article 36. The Management Committee may, after the Banking Commission's opinion, proportionally reduce compensations to the liquidity amount of the deposit guarantee system if the amount at the date of deposit unavailability is lower than the estimated non-recoverable compensation amount, plus related compensation charges. When, following a reduction made in accordance with the preceding paragraph, the Fund's liquidity at the date of this reduction has not been entirely distributed, the surplus and recoveries relative to estimates are allocated to holders of eligible assets, without being able to increase total compensations, considering the provisions of the following article, beyond the compensation ceiling.

Article 37. The reconstruction of available means of the deposit guarantee mechanism, through ordinary contribution payments or through supplementary contributions or special preventive intervention reimbursement, serves, by priority, to complement compensations that had to be reduced pursuant to the preceding article.

CHAPTER III: COMPENSATION PROCEDURE

Article 38. In the event of unavailability of deposits and other eligible assets placed with a credit institution, the Banking Commission immediately requests the intervention of the Central African Deposit Guarantee Fund for the reimbursement or restitution to holders of these deposits and other eligible assets. The unavailability of deposits is confirmed by COBAC no later than thirty (30) days after establishing that a due and payable deposit has not been handed over by a credit institution, for reasons potentially linked to its situation or that of its parent company located in CEMAC, and when circumstances do not allow for reimbursement within a reasonable timeframe.

Article 39. Based on documents produced by the concerned credit institution, the Guarantee Fund verifies depositors' claims related to unavailable deposits.

Article 40. The Guarantee Fund informs depositors without delay, by registered letter or any other means leaving a written trace, of the unavailability of their deposits. This letter specifies for each depositor the amount and nature of covered deposits under deposit protection and claims excluded from compensation, in application of Articles 5 and 6 of Regulation No. 01/09/CEMAC/UMAC/COBAC. It also informs depositors that they have a fifteen (15) day period to submit any useful remarks regarding their compensation or to contest the proposed calculation. At the end of this period, the Guarantee Fund initiates payment of depositors' compensation. The aforementioned letter specifies to depositors the procedures and steps to follow in case of the opening of a collective proceeding against the credit institution, to declare before the creditors' representative or banking and/or judicial liquidator, claims excluded from compensation by the Deposit Guarantee Fund.

Article 41. Unless a holder of eligible assets was unable to timely assert, for legitimate reasons recognized by the Fund, their right to intervention, the intervention request must, under penalty of forfeiture, be submitted to the Fund no later than two (02) months after expiration for eligible assets under deposit protection. The period runs from the date of publication by the Fund of a case of deposit unavailability. The Fund may extend these deadlines. It publishes its decision according to the same procedures as those provided in Article 40 above.

Article 42. The Fund compensates in CFA Francs, within a period of two (02) months from the request submitted by COBAC, claims admitted by it under the guarantee.
When circumstances require, the Guarantee Fund may request COBAC to extend the deadline set in the preceding paragraph, which cannot exceed two (02) months.
COBAC may, at the Fund's request, grant a maximum of two new extensions, each not exceeding two (02) months.
The Fund publishes the Banking Commission's decision according to the same procedures as those provided above.

Article 43. The Fund may, if a holder fails to provide necessary information for processing their reimbursement or compensation request or in case of doubt regarding the validity of supporting elements, suspend payment of intervention until requested information is provided or until proof of the validity of aforementioned elements is furnished.

Article 44. In case of opening a collective proceeding against a credit institution whose deposit unavailability was previously confirmed, the Fund may suspend compensation payment until admission of the claim to the liabilities of banking or judicial liquidation.

Article 45. Within a collective proceeding pronounced against a credit institution with which the Deposit Guarantee Fund has intervened, it transmits to the creditors' representative or banking and/or judicial liquidator the detailed breakdown by depositor of claims compensated by it and those not compensated in application of Articles 5 and 6 of Regulation No. 01 109/CEMAC/UMAC/COBAC.

Article 46. After any payment made by the Deposit Guarantee Fund, the latter substitutes the compensated client and recovers, up to the compensation amount, the claim rights that the client holds against the credit institution.

Article 47. The Permanent Secretariat of the Fund provides depositors with information on the deposit guarantee mechanism, particularly the amount and extent of coverage, compensation conditions/deadlines, as well as formalities to be completed to benefit from a payment under deposit guarantee.

Article 48. The Fund's intervention for the purpose of proceeding to full or partial reimbursement or compensation of holders of deposits and other eligible assets entails the withdrawal of approval of the concerned credit institution.

CHAPTER IV: PROCEDURES FOR USING FUND RESOURCES

Article 49. In the event of unavailability of deposits and other eligible assets entrusted to a credit institution, the Fund proceeds to their reimbursement by deduction from resources held in BEAC's books, in a proportion it defines based on the expected compensation magnitude.

Article 50. In case of insufficient Fund resources, the Management Committee rules on the possibility and procedures for calling supplementary contributions from credit institutions, under conditions it defines.

Article 51. When supplementary resources provided by credit institutions are insufficient to cover all Fund interventions, the Fund requests the State on whose territory the concerned credit institution is located to provide the necessary resource complement for compensating depositors and holders of other eligible assets.

Article 52. In case of using Fund resources held in accounts opened in BEAC's books, the Management Committee rules on the possibility, amount, and procedures for supplementary contributions from credit institutions necessary to reconstruct intervention capacity, respecting limits set in this Regulation.

TITRE V: PREVENTIVE ACTION OF THE FUND

Article 53. The Deposit Guarantee Fund may, upon referral by the General Secretariat of the Banking Commission, provide its assistance to enable the realization of a financial consolidation or total/partial takeover of activities of a credit institution whose good fulfillment of commitments is compromised.

Article 54. The Fund's preventive intervention is effected on the Fund's resources, within available amount limits, when, deliberating unanimously among present members, the Management Committee is of the opinion:
that the institution's situation gives rise to a fear of total or partial unavailability in the near term;