Regulatory Alerts2020-04-02
BCEAO Advisory No. 005-04-2020 on Deferral of Credit Institution Claims Affected by the COVID-19 Pandemic
The Central Bank of West African States (BCEAO) issued Advisory No. 005-04-2020 to authorize credit institutions to defer loan maturities for businesses affected by the COVID-19 pandemic without interest charges, fees, or late penalties. The advisory permits these deferred healthy claims to be classified in a specific account within the healthy claims category rather than as non-performing, thereby preserving their prudential treatment. Affected businesses may request a three-month renewable deferral, and institutions must report the data via a secure online portal while the BCEAO evaluates the accounting and prudential implications alongside the UMOA Banking Commission.
BCEAO CENTRAL BANK OF WEST AFRICAN STATES
The Governor
ADVISORY NO. 005 - 04 - 2020 ON THE DEFERRAL OF MATURITIES OF CREDIT INSTITUTIONS' CLAIMS AFFECTED BY THE COVID-19 PANDEMIC
The Central Bank of West African States (BCEAO) published on March 21, 2020 a set of measures to mitigate the impact of the COVID-19 pandemic on the banking system and the financing of economic activity within the Union.
One of these measures concerns the establishment by the Central Bank, in coordination with the banking system, of support for businesses facing difficulties repaying their loans due to the health crisis.
In this framework, the BCEAO authorizes credit institutions to classify healthy claims that have been subject to a deferral of maturities due to the effects of the COVID-19 pandemic, into a specific account within the category of healthy claims, and not in that of non-performing claims.
Consequently, claims whose maturities have been deferred will also be treated as healthy claims in their respective categories for prudential purposes.
On this basis, the Central Bank invites credit institutions to grant businesses affected by the pandemic's effects and which so request, a deferral of maturities on their loans, for a period of 3 months renewable once, without interest charges, fees, or late penalties.
For affected businesses that have not obtained a deferral of maturities agreement with their partner banks, the BCEAO has established a monitoring and facilitation mechanism named the « COVID-19 Facility ».
This mechanism aims to strengthen the dialogue between businesses and their banking partners and to restore, where applicable, a relationship of trust, based on a joint approach to finding solutions.
Credit institutions that have processed deferrals of maturities on their claims to businesses must transmit the related information to the BCEAO, using the template made available to them in a secure area on the Central Bank's website, at www.bceao.int/Covid-19.
The BCEAO will assess, in coordination with the General Secretariat of the UMOA Banking Commission, the implications of the deferrals of maturities on the accounting and prudential situation of credit institutions.
Done at Dakar, on APRIL 01, 2020
[Signature]
Tiemoko Meyliet KONE
Avenue Abdoulaye FADIGA BP 3108 - Dakar - Senegal Tel. (221) 33 839 05 00 / Fax. (221) 33 823 93 35 courrier.bceao@bceao.int - www.bceao.int