Instruction No. 02/2016 of April 11 - Monetary Policy: Mandatory Reserves — BNA — AO

INSTRUCTION NO. 02/2016 of April 11
SUBJECT: MONETARY POLICY

Mandatory Reserves

Deeming it necessary to adjust the rules for the calculation and compliance of Mandatory Reserves to the current macroeconomic stability framework.

In the exercise of the powers conferred upon me by Article 51 of Law No. 16/10, of July 15, the Law of the Bank of Angola.

I DETERMINE:

Banking Financial Institutions established in the country must maintain mandatory reserves in accordance with this Instruction.
The incidence base for mandatory reserves, in national currency, consists of the amounts recorded according to auxiliary tables (1, 2, 4, 6, 7, 8, and 9) in the following accounts of the Chart of Accounts of Financial Institutions (CONTIF):

2.10.10. Demand Deposits;
2.10.20. Time Deposits;
2.10.80. Other Deposits;
2.20.20. Sale of Own Securities with Repurchase Agreement;

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2.20.30. Sale of Third-Party Securities with Repurchase Agreement;
2.30.10. Securities and Financial Instruments Issued or Endorsed;
2.50.20.10. Obligations from pending Settlement operations;
2.50.20.20. Relations with Correspondents;
2.50.20.30. Obligations for tax collection services.

The incidence base for mandatory reserves, in foreign currency, consists of the amounts recorded according to auxiliary tables (1, 2, 4, 6, 7, 8, and 9) in the following accounts of the Chart of Accounts of Financial Institutions (CONTIF):

2.10.10. Demand Deposits;
2.10.20. Time Deposits;
2.10.80. Other Deposits;
2.20.20. Sale of Own Securities with Repurchase Agreement;
2.20.30. Sale of Third-Party Securities with Repurchase Agreement;
2.30.10. Securities and Financial Instruments Issued or Endorsed;
2.50.20.10. Obligations from pending Settlement operations;
2.50.20.20. Relations with Correspondents;
2.50.20.30. Obligations for tax collection services.

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4. For the purposes of this Instruction, the balances of Bankita accounts, demand and time deposits in national and foreign currency, and all monthly interest from the incidence base defined in numbers 2 and 3 of this Instruction, are not eligible for the calculation of mandatory reserves.

Eligible for the fulfillment of mandatory reserves in national currency are the balances referring to the daily closing of the national currency demand deposit account, opened at the Bank of Angola in the name of each Banking Financial Institution, Treasury Bonds belonging to the own portfolio registered in the Bank of Angola's Asset Market Management System (SIGMA), and the disbursements of financing contracts celebrated with the Ministry of Finance referred to in this Instruction.
Eligible for the fulfillment of mandatory reserves in foreign currency are the following assets:
a. 20% (twenty percent) with the balance of the foreign currency deposit account opened at the Bank of Angola in the name of each Banking Financial Institution; b. 80% (eighty percent) with Treasury Bonds in foreign currency belonging to the own portfolio registered in SIGMA, issued from 2015 onwards.
The calculation of mandatory reserves and their fulfillment are carried out weekly, on the first business day and from the first to the last business day of the week following that of the constitution of the balances referred to in numbers 5 and 6, respectively.
The incidence base defined in numbers 2 and 3 of this Instruction is subject to the following mandatory reserve coefficients:

8.1. The mandatory reserve coefficient to be applied to the daily balances of the items composing the incidence base defined in number 2, excluding the accounts of the Central Government, Local Governments, and Municipal Administrations, is 30% (thirty percent), with banks able to fulfill up to 20% (twenty percent) of the requirement with Treasury Bonds belonging to the banks' own portfolio and/or with Medium and Long-Term Financing Contracts carried out with the Ministry of Finance, weighting their respective maturities, provided they were issued or disbursed, respectively, from January 2015 onwards.

For the calculation of the levels of fulfillment of the requirement with Treasury Bonds and/or Financing Contracts celebrated between the Ministry of Finance and Commercial Banks, the following weightings are used:
a) Bonds with maturity equal to or greater than 5 (five) years – 100% (one hundred percent) of their nominal value; b) Bonds with maturity of 4 (four) years – 75% (seventy-five percent) of their nominal value; c) Bonds with maturity of 3 (three) years – 50% (fifty percent) of their nominal value; d) Bonds with maturity of 2 (two) years – 20% (twenty percent) of their nominal value. e) Disbursements of Financing Contracts with terms equal to or greater than 7 (seven) years – 100% (one hundred percent) of the nominal value; f) Disbursements of Financing Contracts with terms between 6 (six) years, inclusive, and 7 (seven) years, exclusive – 75% (seventy-five percent) of the disbursed nominal value; g) Disbursements of Financing Contracts with terms between 4 (four) years, inclusive, and 6 (six) years, exclusive – 30% (thirty percent) of the disbursed nominal value; h) Disbursements of Financing Contracts with terms between 2 (two) years, inclusive, and 4 (four) years, exclusive – 10% (ten) of the disbursed nominal value.

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8.2. The mandatory reserve coefficients to be applied to the daily balances of the Central Government accounts – NC is 75% (seventy-five percent) and to the balances of Local Governments and Municipal Administrations – NC is 50% (fifty percent).

8.3. The mandatory reserve coefficient to be applied to the daily balances of the items composing the incidence base defined in number 3, excluding the accounts of the Central Government and Local Governments and Municipal Administrations, is 15% (fifteen percent).

8.4. The mandatory reserve coefficients to be applied to the daily balances of the Central Government accounts – FC is 100% (one hundred percent) and to the daily balances of Local Governments and Municipal Administrations accounts – FC is 100% (one hundred percent).

The requirement for the incidence base in national currency, subject to the coefficient of 30% (thirty percent), is calculated weekly on the arithmetic mean of the balances determined in the respective accounts on business days of the week, obeying the following formula:

ETn = crn {∑ [Dtn (T –1)]/N}

Where:

ETn = requirement of week T in NC, corresponding to 30% (Thirty percent) on the incidence base, excluding the accounts of the Central Government, Local Governments, and Municipal Administrations;
crn = mandatory reserve coefficient corresponding to 30% (Thirty percent);
T = T-th calendar week in which the fulfillment of mandatory reserves occurs, (T=1, 2, 3,...,52);
T-1 = T-th calendar week in which the constitution of the final daily credit balances registered in the incidence base accounts referred to in point 8.1 occurs, (T-1=-52, 1, 2,..., 51);
t = business day of the constitution week T-1;
Dtn (T – 1) = final daily credit balances registered in the incidence base accounts referred to in point 8.1, reported on the first business day of the week of fulfillment of the requirement;
N = number of business days of week T-1.

The requirement for the incidence base in foreign currency, subject to the coefficient of 15% (fifteen percent), is calculated weekly on the arithmetic mean of the balances determined in the respective accounts on business days of the week, obeying the following formula:

ETe = cre {∑ [Dte (T –1)]/N}

Where:

ETe = requirement of week T in FC corresponding to 15% (fifteen percent) on the incidence base excluding the accounts of the Central Government, Local Governments, and Municipal Administrations;
cre = mandatory reserve coefficient corresponding to 15% (fifteen percent);
T = T-th calendar week in which the calculation of mandatory reserves occurs, (T=1, 2, 3,..., 52);
T-1 = T-th calendar week in which the constitution of the final daily credit balances registered in the incidence base accounts referred to in point 8.3 occurs, (T-1= -52, 1, 2, ..., 51);
t = business day of the constitution week (T-1);
Dte (T – 1) = final daily credit balances registered in the incidence base accounts referred to in point 8.3, reported on the first business day of the week of fulfillment of the requirement;

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N = number of business days of week T-1.

For the purposes of this Instruction, business days are considered to be the days of the week, excluding Saturdays, Sundays, and national holidays.
The requirement in NC calculated under point 8.1 of this Instruction may be deducted by an amount up to 5% (five percent) of the weekly arithmetic mean of the final daily balances, determined in account 1.10.10 National Currency Cash Box of the Chart of Accounts of Financial Institutions (CONTIF), of the constitution week. For this purpose, the values of checks returned by the clearing service must not be computed.
It may also be deducted from the requirement in NC calculated under point 8.1 of this Instruction, an amount up to 80% (eighty percent) of the Assets representing the value of disbursements of NC credits granted to companies and projects in the sectors of agriculture, livestock, forestry, fisheries, industry, energy, water, and provision of restaurant and hotel services, transportation, and information technology, and others to be considered on a case-by-case basis, as well as all credits granted under the Angola Invests Program and the BDA credit lines, provided they have a maturity of 24 (twenty-four) months or greater.
The amount for the purpose of deducting the mandatory reserve, referred to in the previous paragraph, is determined based on the position of the last day of the constitution week of the credit portfolio granted by the Banking Financial Institution registered in the Bank of Angola's Integrated Financial Information System (SIIF).
The effective value of the reserves to be considered for the fulfillment of the requirement in NC is equal to the sum of 75% (seventy-five percent) of the daily balances of the Central Government accounts, 50% (fifty percent) of the daily balances of the Local Governments and Municipal Administrations accounts, and the amount referred to in point 8.1, deducted by the amounts established in numbers 12 and 13, according to the following formula:

ROdn = ∑[GCdn+ (GLdn) + ETn – DCTn – NMn (T-1)]

Where:

ROdn = effective mandatory reserves in national currency to be considered for the fulfillment of the requirement on day d;
GCdn = 75% (seventy-five percent) of the daily balances of the Central Government accounts in NC on day d;
GLdn = 50% (fifty percent) of the daily balances of the Local Governments and Municipal Administrations accounts in NC on day d;
ETn = requirement in week T in NC, corresponding to 30% (thirty percent) on the incidence base, as referred to in number 9;
DCTn= value corresponding to 60% (sixty percent) on the position of the last business day of the constitution week of the credit portfolio granted by the Banking Financial Institution to the sectors of Agriculture, Fishing, and Food Production;
NMn (T – 1) = amount up to 5% (five percent) of the arithmetic mean of the final daily balances of account 1.10.10 National Currency Cash Box in constitution week T-1;
d = business day of the fulfillment week (T).

The effective value of the reserves to be considered for the fulfillment of the requirement in FC is equal to the sum of the amount corresponding to 100% (one hundred percent) of the daily positions of the Central Government accounts, the amount corresponding to 100% (one hundred percent) of the daily balances of the Local Governments and Municipal Administrations accounts, and 15% (fifteen percent) of the weekly arithmetic mean of the balances of the Incidence Base referred to in point 8.3, according to the following formula:
ROde = ∑[GCde+ GLde+ ETe]

Where:

ROde = effective mandatory reserves in foreign currency to be considered for the fulfillment of the requirement on day d;
GCde= 100% (one hundred percent) of the daily balances of the Central Government accounts in FC on day d;
GLde = 100% (one hundred percent) of the daily balances of the accounts of (Local Governments and Municipal Administrations) in FC on day d;
ETe = requirement in week T in FC corresponding to 15% (fifteen percent) on the incidence base, as referred to in number 10;
d = business day of the fulfillment week (T);

The presentation of data and information related to the calculation of the requirement, as well as the assets for its fulfillment in FC, must be in NC, at the average exchange rate published by the Bank of Angola, in accordance with the CONTIF provisions for this purpose. Meanwhile, for the fulfillment of mandatory reserves in FC, the average daily exchange rate published by the BNA must be considered.
Without prejudice to other measures that may be adopted, the Bank of Angola must apply a sanction equivalent to the product of 1% (one percent) per month above the highest interest rate currently in force for active operations in national currency practiced by financial institutions during the period in question, as provided for in No. 4 of Article 25 of Law No. 16/10, of July 15, the Law of the Bank of Angola, on the daily insufficiency of mandatory reserves, both in national currency and in foreign currency. The Bank of Angola must also apply the same penalty retroactively, for situations where Banking Financial Institutions provide inconsistent data and information that would imply non-compliance with mandatory reserves in the respective week.

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19. The collection of charges resulting from the penalties provided for in number 18 of this Instruction is carried out until the last business day of the week following that of the occurrence, by debit of the national currency demand deposit accounts with the Bank of Angola, both for non-compliance in NC and for non-compliance in FC. For non-compliance in FC, the equivalence will be made through the exchange rate referred to in number 17 of this Instruction. If, by the end of the deadline, the amount of these penalties is not settled, the Bank of Angola proceeds to compulsory debit in the bank's reserve account.

Banking Financial Institutions must be informed by the BNA whenever there is cause for the sanctions provided for in number 18 of this Instruction.
The daily balances of the items composing the incidence base defined in numbers 2 and 3 and the accounts of the Central Government and Local Governments in NC and in FC, as well as the detailed information of credits granted to the State under the Financing Contracts referred to in point 8.1 of this Instruction, must be transmitted daily to the Payment System Department (DSP) of the BNA through SIIF.
Contingency Procedures: In case of unavailability of SIIF, Banking Financial Institutions are obliged to adopt, alternatively, the sending of data via fax and email.
The data referred to in the previous number must be in conformity with CONTIF guidelines and be precise, complete, reliable, and verifiable.

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24. Banking Financial Institutions are obliged to conserve and present to the representatives of the Prudential Supervision Department of Financial Institutions (DSI) of the BNA, whenever requested, the documents that allow proving the information provided for the purpose of calculating the requirement.

Instruction No. 19/2015 of December 02 and all regulation that contradicts the provisions of this Instruction are revoked.
This Instruction enters into force on 18/04/16 for the purpose of constituting the incidence base, with the effective fulfillment of the requirement occurring on 25/04/16.
Doubts in the interpretation and application of this Instruction are clarified by the Payment System Department (DSP).

PUBLISH
Luanda, April 11, 2016

THE GOVERNOR
VALTER FILIPE DUARTE DA SILVA

Instruction No. 02/2016 of April 11 - Monetary Policy: Mandatory Reserves

Lineage: Superseded

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