Instruction No. 005-12-2019 on the Procedures for Establishing Mandatory Reserves at the West African Central Bank

~ CENTRAL BANK OF WEST AFRICAN STATES
~ BCEAO
The Governor
INSTRUCTION No. 005-12-2019 on the Procedures for Establishing Mandatory Reserves at the Central Bank of West African States (BCEAO)

The Governor of the Central Bank of West African States (BCEAO), Having regard to the Treaty of the West African Monetary Union (UMOA), abbreviated UMOA, of 20 January 2007, notably Article 34; Having regard to the Statutes of the Central Bank of West African States, abbreviated BCEAO, annexed to the UMOA Treaty of 20 January 2007, notably Article 62; Having regard to the Uniform Law on Banking Regulation, notably Article 56; Having regard to Decision No. 0397/12/2010 of 06 December 2010 on the rules, instruments and procedures for implementing the monetary and credit policy of the Central Bank of West African States, modified and supplemented by Decision No. 024/2013/CPM/BCEAO of 09 December 2013 and by Decision W02/03/2018/CPM/BCEAO of 07 March 2018, notably Article 1; Having regard to Decision No. 0357-11-2016 of 15 November 2016 instituting the revised UMOA Banking Accounting Plan; Having regard to Instruction No. 003-05-2017 of 05 May 2017 on the reporting of periodic statements by UMOA credit institutions, DECIDES

Article 1: Purpose
This Instruction aims to clarify the procedures for establishing mandatory reserves at the BCEAO by credit institutions operating in UMOA member states.

Article 2: Determination of the Mandatory Reserves Base
The base for mandatory reserves is determined from statements communicated to the BCEAO in application of the provisions of Instruction No. 003-05-2017 of 05 May 2017 on the reporting of periodic statements by UMOA credit institutions, as follows:

• For banks, from data extracted from periodic statements annexed to the monthly accounting statement of the third month prior to the last day of the mandatory reserve composition period;
• For banking financial institutions subject to this requirement, from data drawn from periodic statements annexed to their accounting statement of the second-to-last quarter relative to the effective reserve composition period.

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

Article 3: Calculation of Mandatory Reserves
The minimum amount of mandatory reserves that each subject institution must establish over a given composition period is calculated by applying the in-force mandatory reserve coefficients to the corresponding base elements.

Article 4: Period for Establishing Mandatory Reserves
Mandatory reserves are established by banks on a monthly basis, running from the 16th of each month to the 15th of the following month.
For banking financial institutions subject to this requirement, reserves must be established on a quarterly basis, running from the first to the last day of each quarter.

Article 5: Establishment of Mandatory Reserves
Mandatory reserves are established in a current and/or settlement account.
Subject credit institutions that are direct or indirect participants in the Automated Transfer and Settlement System in WAEMU, abbreviated STAR-UEMOA, establish their mandatory reserves in their settlement accounts within said system. Subject credit institutions that are sub-participants, as well as institutions that are not participants in STAR-UEMOA, establish their mandatory reserves in their ordinary accounts held in the books of the BCEAO. Subject credit institutions are required to establish, on an average basis, the minimum amount of mandatory reserves required. They are not obligated to maintain said amount in account every day. For the assessment of constituted mandatory reserves, account balances are retained by unit of million and without decimals.

Article 6: Declaration of Mandatory Reserves to the Central Bank
Subject credit institutions submit to the BCEAO, within thirty (30) days following the cutoff date of their periodic accounting statements, and in any case before the start of the relevant composition period, duly completed mandatory reserve evaluation forms, in accordance with the models attached to this Instruction. All accounting or statistical documents necessary for calculating mandatory reserves, transmitted to the BCEAO by a subject institution, must present all guarantees of reliability and must be mandatorily signed by persons authorized to commit said institution.

1 Precedes the second-to-last
2 Second-to-last

When the BCEAO cannot determine with precision the amount of mandatory reserves to be established by a subject credit institution, due to the unavailability of required data, it retains as the reserve level to be established by said institution for the relevant composition period the highest amount to which the institution was previously subject over the six (06) last composition periods, until the required documents are produced.

Article 7: Delay in Transmitting Reserve Declarations
Subject credit institutions required to establish mandatory reserves that have not transmitted to the BCEAO, within the required deadlines, the documents referred to in Article 6 of this Instruction, or that have knowingly communicated inaccurate statistics, are subject to the sanctions provided for in this matter by the Uniform Law on Banking Regulation.

Article 8: Control Method for Mandatory Reserves
The Central Bank calculates, at the latest within two (02) working days following the end of the relevant composition period, on the required periods, the arithmetic mean balance of the current or settlement account of each subject institution, according to the following formula:
Sm,t = (1/Nt) * Σ Sc,i where:
Sm,t = average balance of current or settlement account holdings for period 't' of mandatory reserve composition, in millions; Sc = daily balance of the current or settlement account; i = t-th calendar day of the mandatory reserve composition period; Nt = number of calendar days during period 't' of mandatory reserve composition. The balance 'Sc' for non-working days is equal to the daily balance of the preceding working day. A subject credit institution has fulfilled its mandatory reserve establishment obligations when the average balance of current or settlement account holdings is at least equal to the minimum required reserves for said institution, determined in accordance with the provisions of the Monetary Policy Committee decision regarding it. The Central Bank sends to each subject credit institution a statement of the reserves constituted by the institution, compared to the required mandatory reserves.

Article 9: Penalty Calculation Method for Insufficient Mandatory Reserves
The penalty for insufficient constituted mandatory reserves is calculated on the unconstituted portion, at the penalty rate in force at the beginning of the relevant composition period, according to the following formula:
Pt = ((ROt - Sm,t) * T * Nt) / (360 * 100) where:
Pt = penalty amount for period 't' of mandatory reserve composition; ROt = minimum required reserve amount during period 't'; Sm,t = average balance of reserve holdings for period 't'; T = penalty rate in force at the beginning of period 't'; Nt = number of calendar days during period 't'.

Article 10: Notification and Collection of Penalty
Subject credit institutions that have failed in their reserve establishment obligations receive from the Central Bank, within forty-eight (48) hours following the discovery of the breach, a notification specifying the amount of penalties to which they are subject, without prejudice to sanctions that may be taken elsewhere for non-observance of banking regulation. The penalty amount is debited to their current or settlement account opened in the books of the BCEAO. Penalties thus applied become the property of the Central Bank.

Article 11: Entry into Force
This Instruction, including its annexes which form an integral part thereof, repeals and replaces all prior provisions dealing with the same subject, in particular those of Instruction No. 002/03/2011 of 18 March 2011 on the procedures for establishing mandatory reserves at the BCEAO. It enters into force as of the date of its signature and is published wherever necessary. Done in Dakar, 31 DEC. 2019 The Governor Tiémoko Meyliet KONE

ANNEXES
(Instruction No. on the procedures for establishing mandatory reserves at the Central Bank of West African States)

FORMS FOR EVALUATING MANDATORY RESERVES TO BE ESTABLISHED AT THE BCEAO

Annexe 1.1
CENTRAL BANK OF WEST AFRICAN STATES
Main Agency of .
FORM FOR EVALUATING RESERVES TO BE ESTABLISHED AT THE BCEAO DECLARATION OF BANKS AND BANKING FINANCIAL INSTITUTIONS AUTHORIZED TO RECEIVE PUBLIC DEPOSITS Cutoff Date (1):
Institution Name:
Registration Number: R0300-B
(in millions of CFA Francs without decimals)

BALANCE SHEET ITEMS FORMING THE MANDATORY RESERVES BASE	Reconciliation Table	Amounts	Coefficients	Mandatory Reserves to be Established
Libellé (a)	Periodic Statement	Reporting Code	Column PCB	Amounts recorded on periodic statement (b)	Coefficients	Mandatory Reserves to be Established (c) = (a)*(b)
C1 = DEMAND DEPOSITS
- Current accounts in credit of financial institutions	ITBA_RES/nRES	R01_0420	ITBA_RES_(Col 4)+ITBA_nRES_(Col 4)
- Current accounts in credit of Decentralized Financial Systems (SFD)	ITBA_RES/nRES	R01_0420	ITBA_RES_(Col 5)+ITBA_nRES_(Col 5)
- Current accounts in credit of clients	SITUATION	R02_2260	SITUATION_Col 15)
- Other sums due to clients	SITUATION	R02_2610	SITUATION_Col 15)
C2 = SHORT-TERM CREDITS
- Banking financial institutions
- Current accounts in debit	ITBA_RES/nRES	R01_0030	ITBA_RES_(Col 4)+ITBA_nRES_(Col 4)
- Loan accounts - State	ITBA_RES	R01_0170+...	ITBA_RES_(Col 4)_Sum Postes...
- Loan accounts - UMOA	ITBA_nRES	R01_0170+...	ITBA_nRES_(Col 4)_Sum Postes...
Decentralized Financial Systems (SFD)
- Current accounts in debit	ITBA_RES/nRES	R01_0030	ITBA_RES_(Col 5)+ITBA_nRES_(Col 5)
- Loan accounts - State	ITBA_RES	R01_0170+...	ITBA_RES_(Col 5)_Sum Postes...
- Loan accounts - UMOA	ITBA_nRES	R01_0170+...	ITBA_nRES_(Col 5)_Sum Postes...
International or foreign financial institutions
- Current accounts in debit	ITBA_nRES	R01_0030	ITBA_nRES_(Col 2)
- Loan accounts - UMOA	ITBA_nRES	R01_0170+...	ITBA_nRES_(Col 2)_Sum Postes...
- Loan accounts - Rest of World	ITBA_nRES	R01_0170+...	ITBA_nRES_(Col 6+8+10+12)_Sum Postes...
Postal Institutions and International Non-Financial Institutions
- Current accounts in debit	ITBA_RES	R01_0030	ITBA_RES_(Col 2)
- Loan accounts	ITBA_RES	R01_0170+...	ITBA_RES_(Col 2)_Sum Postes...
Public Authorities
- Commercial paper portfolio: ordinary credits	CLIENT_RES/nRES	R02_0230	CLIENT_RES_Sum cols 9+10+11 + CLIENT_nRES_Sum cols 10+11+12
- Other short-term credits: ordinary credits	CLIENT_RES/nRES	R02_0450	CLIENT_RES_Sum cols 9+10+11 + CLIENT_nRES_Sum cols 10+11+12+13+15+17+19
- Current accounts in debit	CLIENT_RES/nRES	R02_0020	CLIENT_RES_Sum cols 9+10+11 + CLIENT_nRES_Sum cols 10+11+12+13+15+17+19
- Leasing/financing credits	CLIENT_RES/nRES	R02_0940	CLIENT_RES_Sum cols 9+10+11 + CLIENT_nRES_Sum cols 10+11+12+13+15+17+19
Other economic agents
- Commercial paper portfolio: campaign credits 1 to 6	CLIENT_RES/nRES	R02_0190	CLIENT_RES_Sum cols 1 to 6 + CLIENT_nRES_Sum cols 2 to 7+14+16+18+20
- Other short-term credits: campaign credits 1 to 8	CLIENT_RES/nRES	R02_0410	CLIENT_RES_Sum cols 1 to 8 + CLIENT_nRES_Sum cols 1 to 9+14+16+18+20
- Commercial paper portfolio: ordinary credits	CLIENT_RES/nRES	R02_0230	CLIENT_RES_Sum cols 1 to 6 + CLIENT_nRES_Sum cols 2 to 7+14+16+18+20
- Other short-term credits: ordinary credits	CLIENT_RES/nRES	R02_0450	CLIENT_RES_Sum cols 1 to 8 + CLIENT_nRES_Sum cols 1 to 9+14+16+18+20
- Current accounts in debit	CLIENT_RES/nRES	R02_0020	CLIENT_RES_Sum cols 1 to 8 + CLIENT_nRES_Sum cols 1 to 9+14+16+18+20
- Leasing/financing credits	CLIENT_RES/nRES	R02_0940	CLIENT_RES_Sum cols 1 to 8 + CLIENT_nRES_Sum cols 1 to 9+14+16+18+20
EM8_ADM	R0H_0040	EMB_ADM_(Col 3)
C3 = GROSS CLAIMS ON THE EXTERIOR
Banknotes and coins	SITUATION	R01_0020	SITUATION_Sum cols 12+13+14+15
Current accounts in debit	ITBA_nRES	R01_0030	ITBA_nRES_Sum cols 6+7+8+9+10+11+12+13
Loan accounts	ITBA_nRES	Sum posts...	ITBA_nRES_Sum posts R01_0170_(cols 6-13)+...
C4 = MEDIUM AND LONG-TERM CREDITS
- Banking financial institutions - State	ITBA_RES	R01_0230+...	ITBA_RES_(Col 4)_Sum Postes...
- SFD - State	ITBA_RES	R01_0230+...	ITBA_RES_(Col 5)_Sum Postes...
- Banking financial institutions - UMOA	CLIENT_RES/nRES	R01_0230+...	ITBA_nRES_(Col 4)_Sum Postes...
- SFD - UMOA	CLIENT_RES/nRES	R01_0230+...	ITBA_nRES_(Col 5)_Sum Postes...
- International financial institutions - UMOA	CLIENT_RES/nRES	R01_0230+...	ITBA_nRES_(Col 2)_Sum Postes...
- International financial institutions - Rest of World	CLIENT_RES/nRES	R01_0230+...	ITBA_nRES_Sum cols 6+8+10+12_Sum Postes...
- Government and non-financial international institutions	CLIENT_RES/nRES	R01_0230+...	ITBA_RES_(Col 2)_Sum Postes...
- Loan accounts: Postal checking accounts	CLIENT_RES/nRES	R01_0230+...
- Medium-term credits: Public Authorities	CLIENT_RES/nRES	R01_0230+...
- Long-term credits: Public Authorities	CLIENT_RES/nRES	R01_0230+...
Other economic agents
- Medium-term credits: Households - ASF - SNF - ISBLSM	CLIENT_RES/nRES	R02_0620+...	CLIENT_RES_Sum cols 9+10+11 + CLIENT_nRES_Sum cols 10+11+12 + cols 13+15+17+19
- Long-term credits: Households - ASF - SNF - ISBLSM	CLIENT_RES/nRES	R02_0620+...	CLIENT_RES_Sum cols 9+10+11 + CLIENT_nRES_Sum cols 10+11+12 + cols 13+15+17+19
- Medium-term credits: Households - ASF - SNF - ISBLSM	CLIENT_RES/nRES	R02_0620+...	CLIENT_RES_Sum cols 1 to 8 + CLIENT_nRES_Sum cols 1 to 9 + cols 14+16+18+20
- Long-term credits: Households - ASF - SNF - ISBLSM	CLIENT_RES/nRES	R02_0620+...	CLIENT_RES_Sum cols 1 to 8 + CLIENT_nRES_Sum cols 1 to 9 + cols 14+16+18+20

MANDATORY RESERVES TO BE ESTABLISHED AT THE BCEAO: (Total C1+C2+C3+C4) DURING THE PERIOD FROM . TO .
(1) Data is cutoff at the end of the third month prior to the month of the last day of the effective reserve composition period. For example, for the period from Jan 16 to Feb 15, consider data in the accounting statement cutoff at end of November, exactly one month and two weeks before the start of the effective reserve composition period. (1) For banking financial institutions authorized to receive demand and/or term deposits, required to use this form, data is cutoff at the end of the second-to-last quarter relative to the effective reserve composition period. For example, for the period from Jan 1 to Mar 31, consider the accounting statement cutoff at end of previous September. (1) For cutoff dates, comply with the calendar communicated by BCEAO for monthly bank statements and quarterly financial institution statements. (b) Mandatory reserve coefficients as set by BCEAO. NB: This form must be completed by the declarant and submitted to BCEAO within 30 days of the cutoff date. Name, Surname, Phone (of the contact person for questions related to this declaration) Serv only the amount of values received under term repurchase agreements with an initial duration of 2 years or less

• Serv the amount of values received under term repurchase agreements with an initial duration exceeding 2 years

Annexe 1.2
CENTRAL BANK OF WEST AFRICAN STATES
Main Agency of .
FORM FOR EVALUATING MANDATORY RESERVES TO BE ESTABLISHED AT THE BCEAO DECLARATION OF BANKING FINANCIAL INSTITUTIONS, CREDIT DISTRIBUTORS, NOT AUTHORIZED TO RECEIVE PUBLIC DEPOSITS Cutoff Date (1):
Institution Name:
Registration Number: R0300-EF
(in millions of CFA Francs without decimals)

BALANCE SHEET ITEMS FORMING THE MANDATORY RESERVES BASE	Reconciliation Table	Amounts Recorded
Libellé (a)	Periodic Statement	Reporting Code	PCB Column (b)	Amounts recorded in the accounting statement transmitted to BCEAO
I - CREDITS TO THE ECONOMY
- Ordinary credits	CLIENT_RES/CLIENT_nRES	R02_0450	CLIENT_RES_(Cols 1 to 11) + CLIENT_nRes (Cols 1 to 20)
- Medium-term credits	CLIENT_RES/CLIENT_nRES	R02_0620	CLIENT_RES_(Cols 1 to 11) + CLIENT_nRes (Cols 1 to 20)
- Long-term credits	CLIENT_RES/CLIENT_nRES	R02_0780	CLIENT_RES_(Cols 1 to 11) + CLIENT_nRes (Cols 1 to 20)
- Leasing/financing credits	CLIENT_RES/CLIENT_nRES	R02_0920	CLIENT_RES_(Cols 1 to 11) + CLIENT_nRes (Cols 1 to 20)
II - TO DEDUCT (Loans obtained from banks & SFD)
- Current accounts in credit	ITBA_RES/ITBA_nRES	R01_0420	ITBA_RES_(Cols 3+5) + ITBA_nRes (Cols 3+5) + (Cols 7+9+11+13)
- Borrowing accounts
- Banks and correspondents - State	ITBA_RES	R01_0540+...	ITBA_RES_(Cols 3+5)_Sum Postes...
- Banks and correspondents - UMOA	ITBA_nRES	R01_0540+...	ITBA_nRES_(Cols 3+5)_Sum Postes...
- Banks and correspondents - Rest of World	ITBA_nRES	R01_0540+...	ITBA_nRES_Sum cols 7+9+11+13_Sum Postes...
III NET AMOUNT OF THE MANDATORY RESERVES BASE (I - II)
IV MANDATORY RESERVE COEFFICIENT (%)
MANDATORY RESERVES TO BE ESTABLISHED AT THE BCEAO:
DURING THE PERIOD FROM . TO .
(Mandatory Reserves = III * IV)
(1) Data is cutoff at the end of the second-to-last quarter relative to the effective reserve composition period. For example, for the period from Jan 1 to Mar 31, consider the accounting statement cutoff at end of previous September. (1) The cutoff date is that appearing in the calendar communicated by BCEAO for quarterly accounting statements. The mandatory reserve coefficient is that notified by BCEAO. NB: This form must be completed by the declarant and submitted to BCEAO within 30 days of the cutoff date. Name, Surname, Phone (of the contact person for questions related to this declaration) Authorized Signature(s)