Notice No. 04/2010 of November 10

BANCO NACIONAL DE ANGOLA
GOVERNOR'S OFFICE

NOTICE NO. 04/2010 of November 10

With the objective of ensuring the regular functioning of the money market and contributing to financial institutions meeting their liquidity needs in a harmonious manner;

Given the need to introduce the Permanent Liquidity Lending Facility;

In these terms, using the competence conferred upon me by Article 51 of Law No. 16/10, dated July 15 - Law of the Banco Nacional de Angola;

I HEREBY DETERMINE:

1. The Regulation on the Permanent Liquidity Lending Facility is approved, which constitutes the annex and forms an integral part of this Notice;
2. The aforementioned facility is henceforth made available by the BNA and is executed at the initiative of eligible financial institutions;
3. The Permanent Liquidity Lending Facility is subject to an interest rate, which shall be defined and published daily by the Banco Nacional de Angola on the BNA's website and in the most widely circulated newspaper;
4. Any doubts arising from the interpretation and application of this Notice shall be addressed and clarified by the Asset Markets Department - DMA and the Payment Systems and Banking Operations Department - DSP;
5. This Notice enters into force on the date of its publication.

PUBLISH

Luanda, November 10, 2010

THE GOVERNOR

JOSÉ DE LIMA MASSANO

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BANCO NACIONAL DE ANGOLA
GOVERNOR'S OFFICE

ANNEX

REGULATION ON THE PERMANENT LIQUIDITY LENDING FACILITY

I. OBJECTIVE

This Regulation aims to establish the framework for Permanent Liquidity Lending Facility operations.

I.1. Eligible to access this type of operation are financial institutions authorized to maintain a deposit account at the BNA and subject to the mandatory reserve regime.

I.2. The Permanent Liquidity Lending Facility is executed against the presentation of adequate guarantees, which consist of eligible assets, in accordance with the conditions established in Chapter V of this Regulation.

I.3. The Permanent Liquidity Lending Facility shall be executed with the commitment to repurchase the assets mobilized as collateral by the indebted financial institution.

I.4. A financial institution may at any time be suspended or excluded from participating in permanent facility operations, based on prudential grounds or the occurrence of serious or persistent defaults on its obligations, as established in Chapter VIII of this Regulation.

II. FUND LIMITS FOR THE LIQUIDITY LENDING FACILITY

The permanent liquidity lending facility has limits defined in a specific regulation.

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BANCO NACIONAL DE ANGOLA
GOVERNOR'S OFFICE

III. PURPOSES AND TERMS

For the purposes of this Regulation, the following purposes are defined for permanent facility operations, whose terms are specified in a specific regulation:

III.1. The Permanent Liquidity Lending Facility operation is carried out at a pre-fixed interest rate intended to satisfy the financial institution's liquidity needs for correcting very short-term imbalances in its cash flows.

IV. INTEREST RATE AND REIMBURSEMENT VALUE

IV.1. The interest rate of the Permanent Liquidity Lending Facility is published every business day at 8:30 a.m. by BNA communication on its website and in the most widely circulated newspaper.

IV.2. Settlement Amounts for Reimbursements of the Permanent Liquidity Lending Facility

The amounts for the financial settlement of reimbursements for operations are calculated as follows:

IV.2.1. In Permanent Liquidity Lending Facility operations, the financial settlement value of the reimbursement “VFLR” corresponds to the initially lent value “VCI” by the BNA to the financial institution, plus interest on the operation, according to the following expression:

$$VFLR = VCI \times \left( 1 + \frac{i_c + spread_c}{100} \right)^{\frac{n}{365}} \text{, with } i_c = \left[ \frac{\sum_{j=1}^{k} c_j m_j}{\sum_{j=1}^{k} m_j} \right]^{\frac{365}{}} - 1 \times 100$$

Where:
ic + spreadc = interest rate for liquidity lending facility operations; sprede = Value defined by the BNA;

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BANCO NACIONAL DE ANGOLA
GOVERNOR'S OFFICE

ic = weekly average interest rate calculated in the primary interbank market; cj = daily factor corresponding to the rate of the j-th operation carried out in the interbank market, referring to the week prior to the liquidity facility; mj = Lending value of the j-th operation carried out in the interbank market, referring to the week prior to the liquidity facility; k = number of operations in the sample carried out in the interbank market, referring to the week prior to the liquidity facility; n = maturity of the operation, i.e., the number of days elapsed from the date of settlement of the first operation, inclusive, to the date of its return settlement, exclusive.

V. ELIGIBLE ASSETS

V.1. Eligibility Criteria

V.1.1. Eligible for Permanent Liquidity Lending Facility operations are tradable assets registered in SIGMA, net of the respective valuation margin (haircut) of that system.

V.1.2. The types of tradable assets eligible for Permanent Liquidity Lending Facility operations are as follows:
a) Public debt securities (Treasury Bonds and Treasury Bills); b) Central Bank securities;

VI. SETTLEMENT PROCEDURES FOR PERMANENT LIQUIDITY LENDING FACILITY OPERATIONS

Financial and securities settlements are subject to the rules and operational procedures set forth in the regulations of their respective settlement systems - SIGMA.

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BANCO NACIONAL DE ANGOLA
GOVERNOR'S OFFICE

VII. REQUEST

Permanent Liquidity Lending Facility operations are carried out through specific SIGMA messages.

Participating financial institutions may access, via SIGMA, the permanent liquidity lending facility for an overnight term, during a time defined in a specific regulation.

VIII. PROCEDURES REGARDING DEFAULTS

A default constitutes the failure by a financial institution to pay the reimbursed amounts lent through Permanent Liquidity Lending Facility operations by the indicated date and time.

Financial institutions in a state of default are subject to measures provided for in specific regulations.