Notice No. 05/2010 of November 10

CENTRAL BANK OF ANGOLA
OFFICE OF THE GOVERNOR

NOTICE NO. 05/2010
of November 10

Whereas it is necessary to regulate the foreign exchange and gold risk exposure limit of financial institutions subject to the supervision of the Central Bank of Angola;

Pursuant to the combined provisions of paragraph f) of number 1 of Article 21 and paragraph d) of number 1 of Article 51, both of Law No. 16/10 of July 15, the Central Bank of Angola Law, combined with Articles 70 and 77 of Law No. 13/05 of September 30 - the Financial Institutions Law;

I DETERMINE:

Article 1
(Foreign exchange risk exposure limit)

Without prejudice to the Regulatory Own Funds required for covering foreign exchange and gold risk established in specific regulation, foreign exchange exposure is limited to 20% (twenty percent) of Regulatory Own Funds for active operations (long positions) and passive positions (short positions).

Article 2
(Definitions)

For the purposes of this Notice, the following shall be understood as:

a) Net foreign exchange exposure, the difference between active or long exposure and passive or short exposure, in foreign currency or indexed to exchange rate variation;

b) Active or long foreign exchange exposure, the sum of assets and other rights in foreign currency or indexed to foreign currency, subject to foreign exchange risk;

c) Passive or short foreign exchange exposure, the sum of liabilities and other obligations in foreign currency or indexed to foreign currency, subject to foreign exchange risk.

Article 3
(Calculation Basis)

1. Foreign exchange and gold risk exposure shall be calculated on all active and passive positions, including off-balance sheet items that result in liabilities established or indexed to foreign currency and gold;

2. Active and passive positions shall be reported at book value, net of provisions and other adjustments.

3. Derivative transactions shall be reported at market value, except for forward transactions which shall be reported at cost value.

4. Provided guarantees, irrevocable commitments, foreign exchange transactions, and services provided by third parties shall be reported at book value.

Article 4
(Conversion)

Foreign exchange and gold risk exposure shall be determined in national currency, by converting the values in foreign currency and gold of transactions, using the day's reference average exchange rate.

Article 5
(Transitional Regime)

To allow financial institutions to adjust to the foreign exchange risk exposure limit, the following implementation schedule shall be observed:

a) By December 31, 2010, exposure shall be at most 70% (seventy percent) for long positions and 40% (forty percent) for short positions;

b) By June 30, 2011, exposure shall be at most 50% (fifty percent) for long positions and 30% (thirty percent) for short positions;

c) By December 31, 2011, exposure shall be at most 30% (thirty percent) for long positions and 20% (twenty percent) for short positions.

d) By June 30, 2012, exposure shall be at most 20% (twenty percent) for long positions and 20% (twenty percent) for short positions.

Article 6
(Penalties)

1. Non-compliance with the provisions of Articles 1 and 5 of this Notice subjects the defaulting financial institution to:

a) Payment of a monetary fine in the amount of Kz 150,000.00 (One Hundred and Fifty Thousand Kwanzas) per day of non-compliance with the aforementioned limits;

b) Without prejudice to other measures that may be adopted, the Central Bank of Angola shall charge a monetary fine of 0.25% (twenty-five hundredths percent daily) calculated on the verified excess.

c) Monetary fines shall be calculated cumulatively and, weekly, debited directly from the reserve bank account of the defaulting financial institution;

2. Financial institutions that exceed the foreign exchange exposure limit established for long positions are barred from participating in foreign currency sales auctions organized by the BNA until regularization.

Article 7
(Repealing Clause)

All regulations contrary to this Notice are hereby repealed, notably Notice No. 06/07 of September 12.

Article 8
(Entry into Force)

This Notice enters into force immediately from the date of its publication.

PUBLISHED

Luanda, on November 10, 2010

THE GOVERNOR

JOSÉ DE LIMA MASSANO