COBAC Regulation R-93/06 on the Liquidity of Credit Institutions

COBAC REGULATION R-93/06 ON THE LIQUIDITY OF CREDIT INSTITUTIONS

The Central African Banking Commission, Having regard to the Convention of 16 October 1990 establishing a Central African Banking Commission; Having regard to Article 9, paragraph 1 of the Annex to the Convention of 16 October 1990; DECIDES:

Article 1 Credit institutions referred to in Article 2 of the Annex to the Convention of 16 October 1990 establishing a Central African Banking Commission are required to maintain a minimum ratio between their available funds and their due liabilities within less than one month, known as the "liquidity ratio".

Article 2 The numerator of the liquidity ratio includes: 1° - when acting as a lender, the cash balance as defined in Article 4 of this Regulation; 2° - when acting as a lender, the balance of collection accounts; 3° - effective drawing facilities with the Central Bank, net of utilized mobilizations. These facilities, which cover mobilizable private instruments, are determined from the portfolio deposited as collateral at the BEAC, within the limit of the global rating for short-term credits where applicable. Exceptionally, when an institution is clearly unable to maintain its drawing facilities by renewing during the following month the instruments deposited with the BEAC, the amount of corresponding advances will be deducted from the drawing facilities; consequently, these may become negative and, as such, be included in the denominator of the liquidity ratio, as defined in Article 3 of this Regulation. 4° - any excess of refinancing agreements with a minimum validity of six months received from institutions subject to this regulation and other companies conducting banking operations abroad as their regular profession, over refinancing agreements granted to institutions of the same nature.

To be eligible for inclusion, contracts relating to refinancing lines in favor of the institution subject to this regulation must include irrevocability clauses during the contractual validity period and availability upon first request. Furthermore, they must be submitted to the General Secretariat of the Banking Commission when transmitting the liquidity reports. The Secretary General may refuse their inclusion. In such cases, they must be excluded from the calculation bases of the next liquidity report. 5° - 75% of maturities within less than one month for non-discounted facilities granted to customers.

Non-discounted facilities refer to all facilities that are not effectively admitted to refinancing by the Central Bank: this includes mobilizable credits not represented by instruments deposited at the BEAC or their portion exceeding the global rating ceiling. 6° - 10% of debtor accounts and other sums due by customers.

• 10% of current debtor accounts, overnight loans, and other loans with a remaining term of up to one month, granted to Treasuries, financial institutions, and various financial institutions other than banks.

Doubtful claims on financial institutions are excluded from debtor balances for the purposes of this Article.

Article 3 The denominator of the liquidity ratio includes: 1° - when acting as a borrower, the cash balance as defined in Article 4 of this Regulation; 2° - when acting as a borrower, the balance of collection accounts; 3° - when acting as a borrower, the balance of clearing accounts and various debtor/creditor accounts (excluding any potentially frozen portion of these accounts); 4° - when acting as a borrower, the balance of branch and agency accounts; 5° - exceptionally, the amount of drawings from the BEAC that cannot be renewed within a month due to lack of mobilizable instruments; 6° - where applicable, the excess of refinancing agreements granted to institutions subject to this regulation and other companies conducting banking operations abroad as their regular profession over refinancing agreements with a minimum validity of six months received from institutions of the same nature.

To be eligible for inclusion under this Article, contracts relating to refinancing lines in favor of the institutions subject to this regulation must include irrevocability clauses during the contractual validity period and availability upon first request. Furthermore, they must be submitted to the General Secretariat of the Banking Commission when transmitting liquidity reports. The Secretary General may refuse their inclusion. In such cases, they must be excluded from the calculation bases of the next liquidity report; 7° - 50% of term deposits and treasury bills maturing within less than one month; 8° - 25% of current deposits;

• 25% of issued disbursements and sums pending allocation;
• 25% of current creditor accounts, overnight borrowings, and other borrowings with a remaining term of up to one month obtained from States, financial institutions, and various financial institutions other than banks; 9° - 10% of savings accounts and passbook accounts; 10° - 2% of off-balance-sheet commitments in favor of customers.

Article 4 The cash balance equals the difference between the following debtor and creditor balances: 1° - balances considered as debtors under this Article include:

• cash holdings,
• current accounts,
• overnight loans,
• other loans with a remaining term of up to one month to the Issuing Institute, CCPs, and banks.

Doubtful claims on banks are excluded from debtor balances for the purposes of this Article.

• Balances considered as creditors under this Article include current accounts, overnight borrowings, other borrowings with a remaining term of up to one month from the Issuing Institute, CCPs and comparable foreign entities, and banks.

Facilities granted by the Issuing Institute for the refinancing of claims are excluded from creditor balances for the purposes of this Article.

The cash balance is considered as lending when the balances referred to in item 1° of this Article exceed those referred to in item 2°. Conversely, the cash balance is considered as borrowing.

Article 5 Subject institutions must at all times present a liquidity ratio of at least 100%.

Article 6 Credit institutions transmit to the General Secretariat of the Banking Commission at the end of each month the liquidity report for the coming month, on a statement conforming to the model defined by instruction. They also submit monthly a supplementary statement of assets, liabilities, and commitments according to the remaining term, conforming to the model defined by instruction.

Article 7 In case of non-compliance with the standard set in Article 5 of this Regulation, the Banking Commission may issue an injunction to ensure that, within a specified period, all measures are taken to bring the concerned institution into compliance with this standard.

If a credit institution fails to comply with an injunction or heed a warning, or seriously breaches the regulation, the Banking Commission may impose one or more of the disciplinary sanctions provided for in Article 13 of the Annex to the Convention of 16 October 1990.

Article 8 The Banking Commission may authorize an institution to temporarily deviate from the provisions of this Regulation, granting it a period to regularize its situation.

Article 9 This Regulation enters into force on 1 July 1993.

Article 10 The Secretary General of the Banking Commission is responsible for the execution of this Regulation.

Done in Yaoundé on 19 April 1993 For the Banking Commission, The President, Jean-Félix MAMALEPOT