CENTRAL BANK OF THE COMOROS

REGULATION No. 004/2015/BCC/DSBR

RELATING TO THE DIVISION OF RISKS AND THE CONTROL OF LARGE EXPOSURES OF CREDIT INSTITUTIONS, IN APPLICATION OF LAW 13-003/AU.

Having regard to Law No. 80-08 of June 26, 1980, relating to currency and the role of the Central Bank of the Comoros in the supervision of banks and financial institutions, credit, and foreign exchange, specifically Article 7;

Having regard to Law No. 13-003/AU of June 12, 2013, regulating the activities of Financial Institutions, specifically Articles 26, 29, 50, and 103;

Having regard to Law No. 12-008/AU of June 28, 2012, combating money laundering and the financing of terrorism;

Having regard to Law No. 12-011/AU of June 28, 2012, regulating and organizing credit leasing;

THE GOVERNOR OF THE CENTRAL BANK OF THE COMOROS;

Sets the prudential rules relating to the division of risks and the supervision of large exposures of credit institutions.

Article 1

The provisions of this Regulation apply to credit institutions as defined by Article 3 of Law No. 13-003/AU:

• on an individual basis, Banks, Financial Companies, Specialized Financial Institutions, and Decentralized Financial Institutions (DFIs) affiliated with an Union whose total balance sheet exceeds 20% of the total consolidated balance sheet of the network;
• on a consolidated basis, each DFI network taken as a whole;
• on a consolidated basis, credit institutions having financial subsidiaries on the territory or abroad.

For DFI networks, it is the responsibility of the Union to implement an appropriate large risk control mechanism applicable to all DFIs affiliated with it that are not subject to this Regulation on an individual basis.

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Place de France. BP 405 MORONI
TEL: (269) 773 18 14 - (269) 773 10 02 – FAX: (269) 773 03 49 E-mail: secretariat@banque-comores.km Site: www.banque-comores.km

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Article 2

Credit institutions are required, under the conditions provided for in this Regulation, to permanently respect:

• a maximum ratio of 25% between the total amount of net risks incurred due to their operations with the same beneficiary and the amount of their regulatory own funds, as defined by the regulation on own funds;
• a maximum ratio of 800% between the cumulative amount of all net risks incurred due to their operations with all beneficiaries of large risks and the amount of their regulatory own funds.

Article 3

Credit institutions may not grant loans or guarantees to members of deliberative and executive bodies, or act as guarantors in their favor, for a total amount exceeding 10% of their own funds.

The same conditions apply to loans granted to the staff of the credit institution.

Article 4

The following are considered as the same beneficiary:

• natural or legal persons who have legal or capital links such that one of them exercises exclusive or joint control or significant influence over the others, directly or indirectly, or who are subject to common de facto management;
• natural or legal persons who are linked in such a way that financial difficulties encountered by one or some of them would cause financial difficulties for one or all of the others.

Such financial links may notably exist between two or more natural or legal persons in any of the following cases:

• the persons are related in the first degree;
• the persons are subsidiaries of the same parent company;
• the persons are subject to common de facto management;
• the persons are local authorities or public establishments;
• the persons are linked by cross-guarantee contracts or maintain predominant business relations, notably subcontracting contracts or close client-supplier relations;
• the persons depend on a common source of financing.

The Central Bank may, when it considers that prudential rules require it, request that two or more clients of a credit institution be considered as the same beneficiary under this Regulation, if the financial links appear to impose it.

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Place de France. BP 405 MORONI
TEL: (269) 773 18 14 - (269) 773 10 02 – FAX: (269) 773 03 49 E-mail: secretariat@banque-comores.km Site: www.banque-comores.km

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Article 5

A large risk, as defined in Article 2 above, is considered to be the aggregate of commitments regarding the same beneficiary equal to or greater than 10% of the credit institution's regulatory own funds.

Declared commitments include balance sheet and off-balance sheet items at their net book value, before taking into account guarantees.

Article 6

The calculation of the large risk coverage ratios defined in Article 2 is carried out according to the following procedures:

a) In the numerator: the total amount of the net exposure of provisions for risks on the same beneficiary, reduced by the value of received guarantees, consisting notably of:

• interbank loans and commitments;
• customer loans, including unpaid amounts and doubtful debts net of provisions, as well as off-balance sheet guarantees or financing commitments in favor of or on behalf of the beneficiary;
• securities held in the portfolio and equity participations;
• credit leasing or factoring commitments, in accordance with Article 10 of Law No. 13-003/AU.

b) In the denominator, the own funds of the credit institution, as defined by the regulation on own funds.

Article 7

Eligible received guarantees are taken into account within the limits of the percentages set out below:

Guarantees deductible at 100% of their value:

• pledge of securities issued by the State and guarantees received from the State;
• pledge of debt securities issued by the Central Bank of the Comoros and other Central Banks;
• pledge of deposits and/or time accounts held with the credit institution, denominated in the same currency as the claims they secure;
• pledge of deposit certificates or equivalent securities issued by the credit institution and deposited with itself;

Guarantees deductible at 80% of their value:

• pledges of deposits and time accounts held with the credit institution, denominated in a currency other than that of the claims they secure;
• bank counter-guarantees from international cooperation financial institutions or regional development Banks.
• subject to the acceptance of the Central Bank, first-demand bank counter-guarantees from a credit institution authorized in the Union of the Comoros or from a foreign credit institution.

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Place de France. BP 405 MORONI
TEL: (269) 773 18 14 - (269) 773 10 02 – FAX: (269) 773 03 49 E-mail: secretariat@banque-comores.km Site: www.banque-comores.km

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Guarantees deductible at 65% of their value:

• the market value of gold deposited as collateral.
• guarantees provided by financial intermediaries.

Guarantees deductible at 30% of their value:

• guarantees provided by territorial administrations and Comorian local authorities;
• guarantees provided by Comorian public enterprises;
• guarantees provided by first-signature international companies;
• first-ranking mortgages on land free of any occupation;
• first-ranking mortgages on residential property to be occupied or rented by the counterparty;
• first-ranking mortgages on property intended entirely for productive activities.
• Securities held in the portfolio and equity participations, except those deducted in the calculation of own funds, under the conditions set by the regulation relating to own funds;

To be eligible, guarantees must comply with the provisions of Article 14 of the regulation on the classification and provisioning of claims.

Article 8

The portion of the risk not covered by any of these guarantees is retained at 100% in the calculation of risks incurred on the same beneficiary.

Article 9

The declaration of large risks provided for in Article 1 of this Regulation must be submitted semi-annually, no later than 30 days after the date of the closing of accounts by credit institutions, according to the model attached as an annex.

Article 10

This Regulation repeals and replaces Instruction No. 007/2004/COB and Circular No. 12/2004/COB.

It enters into force as of its date of signature.

Moroni, January 28, 2015

Mzé Abdou Mohamed Chanfiou

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Place de France. BP 405 MORONI
TEL: (269) 773 18 14 - (269) 773 10 02 – FAX: (269) 773 03 49 E-mail: secretariat@banque-comores.km Site: www.banque-comores.km

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DECLARATIVE STATEMENT OF DIVISION AND LARGE RISKS

(Semi-annual Declaration)
(Regulation No. 004/2015/BCC/DSBR)

Declaring Institution:

Situation as of:

Regulatory Own Funds (determined in accordance with the regulation on OF) - in thousands of Comorian Francs -
Amount equivalent to 10% of own funds	0.00
Amount equivalent to 25% of own funds	0.00
Amount equivalent to 800% of own funds	0.00

List of commitments with net value	Commitment (NBV)	as % of OF	guarantee received	weighting of guarantee (%)	guarantee to deduct	residual risk	as % of OF
#DIV/0!	0.00	#REF!	0.00	0.00	0.00	0.00	0.00
#DIV/0!	0.00	#REF!	0.00	0.00	0.00	0.00	0.00
#DIV/0!	0.00	#REF!	0.00	0.00	0.00	0.00	0.00
#DIV/0!	0.00	#REF!	0.00	0.00	0.00	0.00	0.00
#DIV/0!	0.00	#REF!	0.00	0.00	0.00	0.00	0.00
#DIV/0!	0.00	#REF!	0.00	0.00	0.00	0.00	0.00
#DIV/0!	0.00	#REF!	0.00	0.00	0.00	0.00	0.00
#DIV/0!	0.00	#REF!	0.00	0.00	0.00	0.00	0.00

Cumulative weighted residual risks that reach or exceed 10% of net own funds each

(7) When several debtors are considered as the same beneficiary within the meaning of Article 4, details must be provided)

Infraction if:
Weighted residual risk on the same beneficiary > 25% of OF E > D (800% of Own Funds)

DATE AND VISA