BANK OF THE REPUBLIC OF BURUNDI

THE GOVERNOR

CIRCULAR NO. 10/2018 ON THE CONDITIONS FOR ESTABLISHING AGENCIES, COUNTERS, REPRESENTATION OFFICES AND SUBSIDIARIES 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 (paragraphs 4 and 6) and 8; Having regard to Law No. 1/17 of August 22, 2017 governing banking activities, particularly Articles 3, 21, 34, 35, 49 and 50; Having reviewed Circular No. 10/06 on the conditions for establishing agencies and counters of banks and financial institutions; The Bank of the Republic of Burundi, hereinafter referred to as the "Central Bank", hereby enacts:

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Article 1: Purpose

This circular aims to specify the conditions for establishing agencies, counters, representation offices and subsidiaries of credit institutions having their registered office in Burundi.

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Article 2: Definitions

For the purposes of this circular, the following terms shall mean:

agency, any service established or organized at the headquarters or outside it, through which a credit institution carries out with clients all operations for which it has been authorized;

representation office, an entity of a Burundian law credit institution, without legal personality, enabling it to develop information, liaison and representation activities, without however carrying out banking operations within the host country;

subsidiary, a company in which more than fifty percent of the capital has been formed by contributions made by another company, referred to as the parent company, which ensures its control;

counter, a fixed or mobile location where the credit institution carries out only basic banking operations, including cash withdrawals, deposits, transfers, and cheque collections. Automated Teller Machines (ATMs) are also assimilated to counters.

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Article 3: Types of Counter

Counters fall into two categories:

• full-service counters, open at least five days a week throughout the year, regardless of daily opening hours;
• periodic counters, open either throughout the year for less than five days a week, or five days a week during part of the year.

Opening days and hours are determined by the credit institution following approval by the Central Bank. The Central Bank may intervene at any time to modify the schedule and opening hours if deemed necessary.

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Article 4: Opening, Closing or Transfer of a Counter or Agency

The decision to open, close or transfer a counter or agency of a credit institution must be notified to the Central Bank at least one month before implementation.

The Central Bank may oppose the decision referred to in the first paragraph if prudential considerations justify it.

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Article 5: Opening of Subsidiaries or Representation Offices Abroad

The opening by Burundian law credit institutions of subsidiaries or representation offices abroad is subject to prior authorization from the Central Bank.

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Article 6: Conditions for Opening a Counter, Agency, Subsidiary and Representation Office

The following conditions are required for opening:

• of a counter and representation office: compliance with banking laws and regulations;

• of an agency:
  a) compliance with banking laws and regulations, namely:

  • net total assets effectively exceeding by at least the minimum capital or endowment, the due liabilities;
  • compliance with solvency and liquidity ratios for a period of two (2) consecutive months;
    b) a positive annual net result for a credit institution in operation for three (3) years; c) having conducted an agency profitability study.

• of a subsidiary:

  • compliance with banking laws and regulations;
  • compliance with excess prudential standards for the past five (5) years;
  • having an effective internal control system and good corporate governance;
  • having conducted a feasibility and profitability study for the subsidiary;

In addition to the above prudential conditions, credit institutions must ensure, before opening an agency or counter, that security conditions are met. These include in particular:

• physical security for clients;
• fund security;
• computer connectivity to the headquarters and other agencies and counters of the institution.

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Article 7: Submission of Operating Authorization

Credit institutions must submit to the Central Bank a copy of the operating authorization for the subsidiary and/or representation office issued by the competent authority of the host country, the opening date of the subsidiary or representation office, their registered addresses, as well as a copy of the file submitted during the licensing application.

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Article 8: Incident Notification

Credit institutions are required to promptly inform the Central Bank of any anomaly or serious event, including theft and fraud cases, occurring in the activity or management of agencies and counters.

They are required to promptly inform the Central Bank of any anomaly or serious event occurring in the activity or management of subsidiaries and representation offices that may affect their reputation, financial situation, or compliance with applicable prudential regulations.

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Article 9: Entry into Force

This circular replaces Circular No. 10/06 of November 24, 2006 and enters into force on the day of its publication on the Central Bank's website and in the Official Gazette of Burundi.

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Done in Bujumbura, on August 17, 2018

Jean CIZA
Governor.

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1, Government Avenue - P.O. Box 705 BUJUMBURA - Tel: (257) 22-20 40 00 / 22 22 27 44 - Fax: (257) 223128 - Email: brb@brb.bi