Instruction No. 63 on the Provision of Emergency Liquidity to Banks

BANQUE CENTRALE DU CONGO

THE GOVERNOR

63
INSTRUCTION NO. .................... TO BANKS REGARDING THE PROVISION OF EMERGENCY LIQUIDITY

The Central Bank of Congo,

Having regard to the Organic Law No. 18/027 of December 13, 2018, on the organization and functioning of the Central Bank of Congo, particularly Articles 10 and 11;

Having regard to Law No. 22/069 of December 27, 2022, on the activity and supervision of credit institutions;

Considering the need to establish an operational framework for the provision of emergency liquidity, in order to preserve the stability of the financial system;

Enacts the following provisions:

TITLE I: GENERAL PROVISIONS

Article 1:

This Instruction sets out the procedures and conditions for the provision of emergency liquidity by the Central Bank of Congo to eligible banks facing a temporary liquidity imbalance that may, in particular, harm financial stability.

Article 2:

For the purposes of this Instruction, the following definitions apply:

• eligible bank: a systemically important bank or any other bank meeting the criteria defined in Article 4 of this Instruction;
• emergency liquidity provision (ELP): an operation by which the Central Bank of Congo grants exceptional, temporary, and discretionary financing to an eligible bank facing a situation of temporary illiquidity;

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• financing plan: a document presenting, on a monthly basis, projections of asset and liability items as well as cash flow for a bank throughout the entire duration of the emergency liquidity operation.

Article 3:

The Central Bank of Congo makes available to banks an emergency liquidity provision window aimed at:

• preserving the stability of the financial system by offering temporary support, strictly limited in duration and amount, to eligible banks;
• avoiding the spread of risks linked to a potential failure of a bank.

This window is reserved for systemically important banks as defined in Instruction No. 59 of the Central Bank of Congo. However, the Regulatory Authority may, at its discretion, provide emergency liquidity to non-systemic banks.

TITLE II: ELIGIBILITY CONDITIONS AND CONSTITUTION OF THE EMERGENCY LIQUIDITY APPLICATION FILE

Article 4:

To be eligible for the emergency liquidity window, the applicant must meet the following conditions:

• be solvent and viable at the date of the application and/or demonstrate the ability to maintain/restore its solvency within a period of six months;
• have exhausted all other financing possibilities, particularly on the interbank market, at the refinancing windows of the Central Bank of Congo (intraday loans, loans by auction, marginal lending facility) and intra-group financing;
• justify a temporary liquidity need due to exceptional circumstances;
• present sufficient acceptable collateral, in accordance with Article 9 of this Instruction.

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Article 5:

The application for emergency liquidity assistance must include the following information:

• the amount requested;
• the requested maturity;
• the interest rate;
• the list of assets to be pledged as collateral, in accordance with Article 9 of this Instruction;
• a projected cash flow sheet for the next twelve months;
• a loan repayment schedule;
• a financing plan;
• any other information justifying the request for emergency liquidity.

Article 6:

The use of emergency liquidity under this Instruction excludes any simultaneous access to the monetary policy refinancing window.

When a bank requests emergency liquidity assistance while already benefiting from support under Instruction No. 4 regarding refinancing operations within the framework of monetary policy, such support is automatically switched and reclassified under the conditions of emergency liquidity provision upon implementation of the requested assistance.

TITLE III: OPERATIONAL PROCEDURES

Article 7:

The amount of an emergency liquidity provision operation is calibrated for a maximum period of two weeks based on the projected net cash flows anticipated by the banking institution during this period and transmitted to the Central Bank of Congo, taking into account its current liquidity position.

This amount may include a minimum liquidity buffer to ensure the continuity of the bank's essential operations.

Article 8:

The initial duration of the loan is a maximum of three months, renewable subject to the prior agreement of the Central Bank of Congo and the implementation of enhanced conditions.

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Article 9:

The assets eligible as collateral for an emergency liquidity provision operation are:

• assets eligible under Instruction No. 6 of the Central Bank of Congo regarding acceptable collateral for refinancing operations within the framework of monetary policy;
• sound claims on financial and non-financial enterprises as well as on retail clients that do not meet the eligibility criteria for the refinancing window, in accordance with Instruction No. 6 of the Central Bank of Congo regarding acceptable collateral for money market operations;
• tangible and financial fixed assets, with the exception of equity investments.

The assets referred to in the first paragraph must meet the following conditions:

• the value of the assets provided as collateral must fully cover the loan granted, including interest to be paid, and this after application of the haircut;
• be the property of the requesting banking institution;
• not be pledged or free of any encumbrance;
• have a maturity later than that of the emergency liquidity provision contract;
• not be issued or guaranteed by the requesting banking institution or a party related to it.

Eligible collateral is subject to haircuts established at the discretion of the Central Bank of Congo and accepted based on their liquidity and market value. The Central Bank of Congo may require additional guarantees in the event of a depreciation of the guarantees already provided during the duration of the emergency liquidity provision operation.

The Central Bank of Congo determines the priority order of assets accepted as collateral in the framework of emergency liquidity provision.

Article 10:

The interest rate applicable to the provision of emergency liquidity is set at least 3.5 percentage points above the marginal lending facility rate, according to the discretionary assessment of the Central Bank of Congo. Interest is deducted at source upon the granting of the emergency liquidity loan.

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Article 11:

The amount made available to the bank corresponds to the amount granted by the Central Bank of Congo minus the deducted interest and value-added tax.

Article 12:

The beneficiary of emergency liquidity is required to strictly apply the following additional measures:

• suspension of dividend distributions and exceptional expenditures;
• transmission of a daily report on its cash flow situation to the Central Bank of Congo/Departments responsible for money market banking operations as well as financial stability;
• flawless implementation of a financing plan validated by the Central Bank of Congo;
• any other measure imposed by the Central Bank of Congo.

Article 13:

Repayment of the emergency liquidity is due at the end of the period granted by the Central Bank of Congo.

It is effected by automatic debit of the settlement account opened in the books of the Central Bank of Congo, within the framework of the Automated Transfer System (ATS).

Article 14:

The Central Bank of Congo conducts enhanced monitoring of the liquidity situation and the use of allocated funds. It may impose audits or corrective measures if necessary.

TITLE IV: CONDITIONS AND PROCEDURES FOR IMPLEMENTING EMERGENCY LIQUIDITY

Article 15:

The final decision to grant emergency liquidity falls within the discretionary power of the Governor of the Central Bank of Congo.

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The implementation of emergency liquidity is conditioned by the signing of a loan contract between the Central Bank of Congo and the requesting banking institution, which specifies the terms of granting said facility.

Article 16:

The Central Bank of Congo may, at any time, suspend or terminate the loan contract for emergency liquidity provision, particularly in the event of:

• non-compliance by the bank with the provisions of said loan contract, this Instruction, or other applicable regulatory provisions;
• insufficiency of assets pledged as collateral following the depreciation of their value.

TITLE V: FINAL PROVISIONS

Article 17:

All information related to emergency liquidity provision operations is strictly confidential and cannot be disclosed, except upon express decision of the Central Bank of Congo.

Article 18:

This Instruction enters into force on the date of its signature and repeals all prior provisions contrary to it.

Done in Kinshasa, on DEC 11, 2025

André WAMESO NKUALOLOKI
Governor

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