Notice No. 10/2023: Credit Granting Procedures by the Bank of Angola to Solvent Banking Institutions Facing Temporary Liquidity Problems

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PUBLISHED IN THE OFFICIAL GAZETTE, FIRST SERIES, NO. 161, OF 28 AUGUST 2023 NOTICE NO. 10/2023 SUBJECT: FINANCIAL SYSTEM

• Credit Granting Procedures by the Bank of Angola to Solvent Banking Financial Institutions Facing Temporary Liquidity Problems

Given the need to define the rules and procedures that Banking Financial Institutions must observe to access credit made available by the Bank of Angola, with the objective of preventing systemic disturbances that could compromise the normal functioning of the Banking System; Under the combined provisions of letters a) and b) of paragraph 1 of Article 161 of Law No. 14/21, dated 19 May (General Regime for Banking Financial Institutions Law), as well as letter b) of paragraph 1, letter d) of paragraph 1 and paragraphs 2 of Article 24, letters d) and f) of paragraph 1 of Article 31, and paragraph 1 of Article 98, all of Law No. 24/21, dated 18 October (Bank of Angola Law).

I DETERMINE:
Article 1.
(Subject Matter)
This Notice establishes the rules and procedures that solvent Banking Financial Institutions facing temporary liquidity problems must observe when requesting credit from the Bank of Angola,

CONTINUATION OF NOTICE NO. 10/2023 Page 2 of 6 subject to the provision of adequate and sufficient guarantees, and, where appropriate, under the condition of adopting corrective measures.
Article 2.
(Scope)
This Notice applies to Banking Financial Institutions, as established in paragraph 2 of Article 24 of Law No. 24/21, dated 18 October (Bank of Angola Law).
Article 3.
(Submission of Request and Eligibility Conditions)

1. Banking Financial Institutions wishing to access credit under this Notice must demonstrate that they are experiencing temporary liquidity problems and prove that all alternative sources in the interbank market have been exhausted.
2. Without prejudice to the preceding paragraph, only Banking Financial Institutions that are solvent, with a credible prospect of maintaining or restoring adequate capital ratios in the short term, and capable of repaying the acquired funds may request credit from the Bank of Angola. To this end, they must comply with the following requirements:
   a) Maintain Regulatory Capital Ratios above the minimum limits defined in current regulations on the matter; b) Provide adequate and sufficient guarantees; c) Submit a plan for the application of funds and a repayment outlook within a period not exceeding 180 (one hundred and eighty) days, renewable once for an equal period; d) Present a sustainable prospective cost and revenue structure; and e) Present a viable and sustainable business model in the medium to long term, capable of generating sufficient profitability to avoid the need for refinancing.

CONTINUATION OF NOTICE NO. 10/2023 Page 3 of 6
3. Whenever a Banking Financial Institution presents a regulatory capital ratio below the stipulated limit in letter a) of the preceding paragraph, the Bank of Angola may consider granting credit, provided that the Institution presents an action plan foreseeing recapitalization, asset sales, and other leverage measures that allow recovery of its solvency in the short term.
4. For the purposes of letter b) of paragraph 2, adequate and sufficient guarantees include, among others, credit rights and debt instruments with a haircut rate applied to the market value on the date of the request.
5. The maturity of the guarantee must be equal to or later than the maturity date of the operation.
6. The Banking Financial Institution must provide the Bank of Angola with a detailed and updated list of its unencumbered assets.
7. For the purposes of paragraph 1, the credit request must be addressed to the Governor of the Bank of Angola and include the following elements:
a) Detailed information on liquidity needs; b) Justification of the impact of the level of liquidity needs on the financial structure of the requesting Institution; c) List of guarantees to be provided, in accordance with current legislation; and d) Specific purpose for the application of credit.
8. The Bank of Angola may, if deemed necessary, request any additional information from the requesting Institution and verify the accuracy of the provided information.
9. The Bank of Angola reserves the right to evaluate the provided guarantees based on specific market conditions and their associated risk.
Article 4.
(Conditions)

CONTINUATION OF NOTICE NO. 10/2023 Page 4 of 6

1. In granting credit, the Bank of Angola reserves the right to determine restrictions that must be included in the credit contract, depending on the financial situation of the Banking Financial Institution.
2. For the purposes of the preceding paragraph, the following restrictions are considered, among others:
   a) Suspension of dividend distribution; b) Prohibition on granting new loans and making significant investments; c) Prohibition on lending to related parties; d) Prohibition on access to certain markets; and e) Cost containment.
   Article 5.
   (Limits)
   The sum of the borrower's capital and interest during the established period must not exceed the amount of the provided guarantees, evaluated in accordance with current legislation.
   Article 6.
   (Financing Currency)
   For the purposes of this Notice, credit granted is made available in national currency.
   Article 7.
   (Interest Rate)
   For credit granting purposes, the permanent liquidity facility rate plus a spread of 2% (two percent) must be considered, and this must be included in the credit contract to be executed with the Banking Financial Institution.
   Article 8.
   (Maturity)
3. Repayment of the granted credit must be made within the period established in the contract, calculated from the valuation date of its granting.

CONTINUATION OF NOTICE NO. 10/2023 Page 5 of 6
2. For the purposes of the preceding paragraph, the Bank of Angola may, upon application by the borrowing Banking Financial Institution or when systemic risk circumstances justify it, authorize an extension of the credit repayment period, which must not exceed 180 (one hundred and eighty) days as provided in current legislation, renewable once for an equal period.
Article 9.
(Monitoring of Credit Application)

1. Borrowing Banking Financial Institutions must report to the Bank of Angola information on the application of credit and its impact on restoring their liquidity position, on a weekly basis, calculated from the valuation date of the credit.
2. Without prejudice to the preceding paragraph, the Bank of Angola may conduct inspections at dates it deems pertinent to verify compliance with provided information and the evolution of the Institution's liquidity situation.
3. Whenever it is found that the granted credit is not being used for its intended purpose, the borrowing Banking Financial Institution is required to repay the credit and all associated costs immediately, regardless of its maturity date, without prejudice to any additional measures that may be applied.
   Article 10.
   (Information Reporting)
   During the contract term, Banking Financial Institutions must report to the Bank of Angola quarterly a financing and capital plan, and daily a monitoring report on the liquidity situation, foreseeing corrective actions to be taken in the short term to restore liquidity.
   Article 11.
   (Doubts and Omissions)

CONTINUATION OF NOTICE NO. 10/2023 Page 6 of 6 Doubts and omissions resulting from the interpretation and application of this Notice are resolved by the Bank of Angola.
Article 12.
(Sanctions)
Non-compliance with the provisions established in this Notice constitutes an offense provided for and punishable under Law No. 14/21, dated 19 May (General Regime for Banking Financial Institutions Law).
Article 13.
(Revocation)
The provisions in point 3 of Article 1 and Annex III, both of Notice No. 12/2012, dated 02 April, are revoked.
Article 14.
(Entry into Force)
This Notice enters into force on the date of its publication.
PUBLISH.
Luanda, 14 August 2023.
THE GOVERNOR
MANUEL ANTÓNIO TIAGO DIAS