Notice No. 05/96 of 17 April

NOTICE NO. 05/96 of 17 April
The Financial Institutions Law establishes, in a generic manner, the limits on risk concentration within certain entities.
Whereas it is necessary to clarify the applicable concepts to better control the significant risks of credit institutions; Whereas, furthermore, the provisions of point 4 of Article 21 of the Organic Law of the National Bank of Angola apply; HEREBY DETERMINE:
Article 1
All credit institutions must carry out adequate management of the risks they assume in the development of their activities, in order to prevent situations that could affect their solvency.
Article 2
For the purposes of this Notice, the following shall be considered:
a) - RISK - any facility, used or not, granted by a credit institution and manifested, inter alia, in the extension of credit, even in the form of a guarantee, bank guarantee or similar, and in the investment or holding of financial participations, or securities of any nature issued by the same client; b) - LARGE RISK - the risk assumed by a credit institution when its value, alone or together with other existing risks regarding the same client, represents at least 10% of the credit institution's own funds; c) - OWN FUNDS – the amounts indicated in Notice No. 7/93 of 18 May, calculated under the conditions established therein.
Article 3
1- Credit institutions that grant a single client credits amounting to more than 0.5% of their own funds must establish the respective individual file containing adequate and updated information on the client's economic and financial situation, particularly that which must be included in the reporting documents.

2- In the case of a legal entity, the respective file must also contain detailed information regarding its share capital and its distribution, partners or shareholders, and those responsible for the current management of the entity.
Article 4
Credit institutions, regarding the risks they assume, shall be subject to the following limits:
a)- With respect to a single client, they may not incur risk whose total value exceeds 30% of their own funds. b) - The aggregate value of large risks assumed with its clients may not exceed three times their own funds.
Article 5
1- Under exceptional circumstances, and upon duly justified request from credit institutions, the National Bank of Angola may authorize a temporary exceedance of the limits set forth in the preceding article. 2- In the amendments granted under the preceding paragraph, the National Bank of Angola shall set the deadline and conditions for the adapting institution to comply with the new limits.
Article 6
1- Risks related to all natural or legal persons whose established relationships lead to the presumption that financial difficulties occurring in one of them could affect the financial solidity of the others shall be considered as assumed with a single client. 2- The following are, in particular, covered by the provisions of this article:
a)- General partnerships and their respective partners; b) – Limited partnerships and the limited partners; c) – Natural or legal persons and the companies controlled by them. 3- A natural or legal person controls a company when it holds:
a) – More than 50% of its respective capital; or b) - The majority of voting rights; or c) - The right to appoint or remove the majority of members of their respective Management or Executive and Supervisory Bodies.

4- Credit institutions are obligated to identify the interdependencies and links of their clients, in order to comply with the provisions of this article.
Article 7.
Entities included in the administrative public sector and international public organizations of which Angola is a member are exempt from the limits established in Article 4.
Article 8.
The following are not considered, for the purposes of the calculation established in Article 4:
a) – Risks covered by promissory notes for time deposits maturing within the credit repayment period; b) Risks related to transactions with other credit institutions.
Article 9.
Credit institutions shall regularize compliance with Articles 3 and 4 by 31 May 1996.
Article 10
This Notice enters into force immediately.
PUBLISH
Luanda, 17 April 1996
THE GOVERNOR
ANTÓNIO GOMES FURTADO