Notice No. 10/2020 of April 3 on Credit Concession to the Real Economy

PUBLISHED IN THE OFFICIAL GAZETTE, SERIES I, NO. 42, OF APRIL 3 NOTICE NO. 10/2020 SUBJECT: CREDIT CONCESSION TO THE REAL ECONOMY SECTOR

• Terms and Conditions With a view to promoting economic diversification and, thereby, reducing the excessive dependence on goods and services imports and contributing to the sustainability of the country's external accounts, the BNA published Notices 4/2019 of April 3 and 7/19 of October 7, selecting 17 products with the potential to more rapidly contribute to covering internal consumption needs; Meanwhile, the most recent economic developments, marked by the sharp decline in oil prices and the impact of Covid-19 on global economies, recommend strengthening the rules established in previous Notices regarding credit concession by Banking Financial Institutions to national producers of goods considered essential, whose domestic production does not yet satisfy internal demand; Considering the above and bearing in mind Presidential Decree No. 23/19 of January 14, which approves the Regulation on the Commercial Supply Chain for Basic Basket Goods and Other Priority National-Origin Goods, conditioning the importation of certain products to prioritize domestic product consumption; Under the combined provisions of paragraph d) and f) of section 1 of Article 21, and paragraph d) of section 1 of Article 51, both of Law No. 16/10 of July 15 – the National Bank of Angola Act, and after consulting the Angolan Banks Association. I HEREBY DETERMINE:

Article 1. (Scope)

1. This Notice applies to credit concession by Banking Financial Institutions for the production of essential goods that present domestic supply deficits, including raw materials and investment necessary for their production, with investment covering the acquisition of technology, machinery, and equipment.
2. The essential goods referred to in the preceding section are the products listed in Presidential Decree No. 23/19 of January 14, including: a) Rice; b) Hygiene products; c) Poultry farming, cattle farming, goat farming, swine farming and derivatives; d) Beverages, including juices; e) Sugarcane and derivatives; f) Cement; g) Clinker; h) Coffee cultivation and derivatives; i) Packaging; j) Beans and derivatives; k) Tropical fruit; l) Vegetables; m) Milk and derivatives; n) Wood and derivatives; o) Honey; p) Maize (corn) and derivatives; q) Edible oil; r) Palm products; s) Commercial fishing, aquaculture and all activities related to the fishing industry; t) Soap and detergents; u) Common salt; v) Soybeans; w) Construction paint; x) Tubers and derivatives; y) Steel reinforcement bars for construction; z) Glass.

CONTINUATION OF NOTICE NO. 10/2020 Page 2 of 6

Article 2. (Credit Concession Priorities) In compliance with the provisions of this Notice, Banking Financial Institutions must encourage and prioritize credit operations submitted by Agricultural Cooperatives and Small and Medium Enterprises (SMEs).

Article 3. (Credit Cost for the Borrower)

1. The total cost of credit to be granted under this Notice, including the nominal interest rate and fees, may not exceed 7.5% (seven point five percent) per year.
2. In the event that a client requests public guarantee, expenses payable to the Credit Guarantee Fund are added to the cost referred to in the preceding section.

Article 4. (Limits to be Met by Banking Financial Institutions in Credit Concession)

1. The balance of contracted credit by each Banking Financial Institution under this Notice and Notices No. 4/19 and 7/19 of April 3 and October 7, respectively, at the close of each fiscal year, must correspond to at least 2.5% (two point five percent) of the total net asset value recorded in its balance sheet as of December 31 of the preceding year.
2. In addition to the condition established in the preceding section, for the 2020 fiscal year, Banking Financial Institutions must ensure the contracting of a minimum of: a) 50 (fifty) new credits, if the total net asset value recorded in their balance sheet is equal to or greater than Kz 1,500,000,000.00 (one billion five hundred million Kwanzas) as of December 31, 2019; b) 20 (twenty) new credits, if the total net asset value recorded in their balance sheet is lower than indicated in the preceding subsection.
3. Credits restructured without disbursement are eligible for compliance with section 1 of this article, provided the restructuring is carried out under the financial conditions established in this Notice.
4. Credits granted to related entities are not eligible for compliance with sections 1 and 2 of this article, namely: a) Holders of qualified shareholdings in the Banking Financial Institution and related natural or legal persons; b) Members of the administrative and supervisory bodies of Banking Financial Institutions, their spouses, descendants or ascendants up to the second degree in the direct line, and companies owned or managed by them.
5. The National Bank of Angola may annually alter the requirements established in this article.

Article 5. (Assessment and Risk Management Criteria)

1. Banking Financial Institutions must offer credit products suitable for the purposes referred to in Article 1 of this Notice.
2. Banking Financial Institutions must formalize a policy for credit concession under this Notice that defines assessment and risk management criteria appropriate to the nature, amount, and characteristics of the aforementioned operations, serving as a basis for classifying operational risk and establishing provisions and impairments required by current accounting standards.
3. Assessment criteria must take into account the provisions of Instrutivo 4/2019 regarding client solvency assessment, adapted to the nature, amount, and characteristics of credit operations covered by this Notice.
4. The policy referred to in this article must also include, when evaluating the client's capacity to meet financial obligations to the Banking Financial Institution, a detailed analysis of specific sector risks in which the client's activity is embedded.
5. Banking Financial Institutions must resort to outsourcing entities with recognized knowledge of the activity sectors in which their clients operate, whenever necessary, to ensure a complete assessment of risks associated with credit concession.

Article 6. (Deduction of Mandatory Reserves)

1. Credit granted for the purposes specified in Article 1 of this Notice is deductible from the mandatory reserve value to be established by each Banking Financial Institution, except: a) Any credit granted to related entities, as defined in section 4 of Article 4 of this Notice; b) Credit initially granted prior to the effective date of Notice No. 4/2019 of April 3 and restructured after the effective date of this Notice, regardless of applicable financial conditions.
2. For the purposes of the preceding section, deduction must be calculated on the accumulated value of disbursements as of the reporting date for mandatory reserves.

Article 7. (Information Publication)

1. Banking Financial Institutions must: a) Publish, within 30 days of the effective date of this Notice, on their institutional website, the total accumulated value of credit granted to date under this Notice and Notices No. 4/2019 of April 3 and 7/2019 of October 7; b) Update the published value on the last day of July, October, and January each year.
2. Banking Financial Institutions must observe banking secrecy in disclosing any information regarding credits granted under this Notice.

Article 8. (Information Reporting) Banking Financial Institutions must report information on credit granted under this Notice to the National Bank of Angola, in the format established by specific regulation.

Article 9. (Sanctions) This Notice is based on the "comply & explain" principle, and the National Bank of Angola must decide case-by-case on measures/sanctions to be applied to Banking Financial Institutions that fail to meet the credit concession limits and other requirements established herein, based on the justifications provided.

Article 10. (Repeal) Notices No. 4/2019 of April 3 and 7/2019 of October 7 are hereby repealed.

Article 9. (Doubts and Omissions) Doubts and omissions resulting from the interpretation and application of this Notice are resolved by the National Bank of Angola.

Article 10. (Entry into Force) This Notice enters into force on the date of its publication. PUBLISH. Luanda, April 1, 2020. THE GOVERNOR JOSÉ DE LIMA MASSANO