Notice No. 1/2025 of April 30 on Credit Concessions to Related Parties and Senior Management

PUBLISHED IN THE OFFICIAL GAZETTE, FIRST SERIES, NO. 79, OF APRIL 30, 2025 NOTICE NO. 01/2025 SUBJECT: FINANCIAL SYSTEM − Credit Concessions to Related Parties and Holders of Senior Management Functions or Positions

Whereas it is necessary to redefine the limits and scope regarding credit concessions by Banking Financial Institutions to related parties, within the framework of preventing and managing conflict-of-interest risks; In accordance with the combined provisions of Article 36 of Law No. 14/21, dated May 19 - General Regime for Financial Institutions Law, and paragraphs 1 and 3 of Article 98 of Law No. 24/21, dated October 18, the Central Bank of Angola Law.

I HEREBY DETERMINE:

Article 1. (Subject Matter)
The present Notice establishes the terms and conditions for credit concessions by Banking Financial Institutions, in any form or modality, including the provision of guarantees, to related parties and holders of senior management functions or positions.

Article 2. (Scope)

1. This Notice applies to Banking Financial Institutions supervised by the Central Bank of Angola, hereinafter abbreviated as Institutions.
2. The provisions of this Notice do not apply when the related party, as credit beneficiary, is the State.

Article 3. (Essential Criteria in Transactions with Related Parties and Holders of Senior Management Functions or Positions)

1. Institutions must ensure that transactions covered by this Notice are carried out based on a risk assessment and under conditions identical to those applied to non-related parties.
2. Applied conditions must include credit assessment assumptions, term, interest rates, commissions, amortization schedules, guarantee requirements, credit approval time, and others.
3. Institutions must ensure that transactions with related parties and the write-off of related party credits are approved by a qualified majority of at least two-thirds of the members of the governing body and with the favorable opinion of the Institution's supervisory body.
4. Institutions must define policies and establish procedures to ensure that members with potential conflicts of interest are excluded from the approval process for granting and managing credits or other transactions of the related party.

Article 4. (Monitoring of Transactions with Related Parties)

1. Institutions must maintain an updated list of related parties, including Holders of senior management functions or positions as defined in paragraph 39 of Article 3 and paragraphs 1 and 2 of Article 68 of Law No. 14/21 dated May 19, General Regime for Financial Institutions Law, as well as in sub-paragraph b) of Article 3 of Notice No. 11/20 dated April 11, and establish procedures to identify individual and aggregate exposures, as well as other transactions with related parties and Holders of senior management functions or positions, and their respective amounts.
2. Institutions must conduct annual minimum periodic audits of transactions with related parties and holders of senior management functions or positions, and submit them to the Central Bank of Angola whenever requested.

Article 5. (Credit Exposure Limits)

1. The sum of credit exposures, in any form or modality, including the provision of guarantees, directly or indirectly, with related parties and holders of relevant functions or positions, must not exceed 15% (Fifteen percent) of Core Tier 1 Own Funds, calculated in accordance with Notice No. 08/21 dated July 5, minus the value of holdings in Institutions authorized to operate by the Central Bank of Angola, as well as branches and subsidiaries of Financial Institutions abroad, observing the following maximum limits:
   a) For holders of qualified participations:
   i. 1% (One percent) for credit contracted by natural persons; and,
   ii. 5% (Five percent) for credit contracted by legal entities, including group-related entities.
   b) For other related parties not holding qualified participations, including holders of senior management functions or positions, whether natural or legal persons, the limit is set at 1% (One percent) of Tier 1 own funds.
2. Whenever exposures exceed the limits established in the preceding paragraphs and sub-paragraphs, the Institution must immediately report the exposure value and ratio to the Central Bank of Angola and submit an action plan within 1 (one) month, providing for their regularization up to a maximum of 6 (Six) months.
3. During the non-compliance referred to in the preceding paragraph, Institutions are subject to the immediate application of a penalty on own funds requirements, without prejudice to other penalties that may be applied by the Central Bank of Angola.

Article 6. (Record Keeping and Reporting)

1. Institutions must maintain records of transactions with related parties and holders of senior management functions or positions for a minimum period of 10 (ten) years, after the date each party ceases to be considered related.
2. Institutions must report to the Central Bank of Angola, quarterly, the total amount of credits to related parties and holders of senior management functions or positions, as defined in specific regulations.

Article 7. (Transitional Provision)
Credits granted or approved by the date of publication of this Notice, in amounts exceeding the defined limits, may remain in force under approved or contracted terms and amounts, without the value or term being increased, nor the credit renewed, after said publication date.

Article 8. (Penalties)
Non-compliance with the rules established in this Notice constitutes an offense provided for and punishable under Law No. 14/21 dated May 19, General Regime for Financial Institutions Law.

Article 9. (Interpretation and Omissions)
Doubts and omissions resulting from the interpretation and application of this Notice are resolved by the Central Bank of Angola.

Article 10. (Repeal)
Notice No. 06/20 dated March 10 is hereby repealed, along with all regulations contrary to the provisions of this Notice.

Article 11. (Entry into Force)
The present Notice enters into force on the date of its publication.

PUBLISH.
Luanda, April 24, 2025.
THE GOVERNOR
MANUEL ANTÓNIO TIAGO DIAS