Notice No. 8/GBM/2023, of December 11 - Determines the Prudential Ratios and Limits for Financial Leasing Companies

SUMMARY
NOTICE
The material to be published in the «Boletim da República» must be submitted in a duly authenticated copy, one for each subject, containing, in addition to the necessary indications for this purpose, the following endorsement, signed and authenticated: For publication in the «Boletim da República». NATIONAL PRESS OF MOZAMBIQUE, S.A. Bank of Mozambique:
Notice No. 7/GBM/2023:
Determines the Prudential Rules for Exchange Offices and revokes Notice No. 10/GGBM/95, of September 1.
Notice No. 8/GBM/2023:
Determines the Prudential Ratios and Limits for Financial Leasing Companies.
Monday, December 11, 2023 I SERIES — Number 237 BANK OF MOZAMBIQUE Notice No. 7/GBM/2023 of December 11 Given the need to determine the specific prudential rules for exchange offices, the Bank of Mozambique, in exercise of the powers conferred upon it by Article 85 of Law No. 20/2020, of December 31, the Law on Credit Institutions and Financial Companies, determines:
CHAPTER I
General Provisions
ARTICLE 1
Subject Matter
This Notice establishes the prudential rules applicable to exchange offices.
ARTICLE 2
Scope
This Notice applies to exchange offices in the exercise of their activities.
ARTICLE 3
Duty of Continuous Compliance
Exchange offices must continuously and permanently observe the rules established in this Notice.
CHAPTER II
Own Funds and Limits on Foreign Exchange Position
ARTICLE 4
Composition of Own Funds
The own funds of exchange offices consist of positive and negative elements, as defined in Articles 5 and 6 of this Notice.
ARTICLE 5
Positive Elements of Own Funds
The following are considered positive elements of own funds:
a) paid-up capital, including the portion represented by non-convertible preferred shares; b) premiums on the issuance of shares and other securities; c) legal, statutory, and other reserves formed from undistributed profits; d) carried-forward positive results from previous financial years; e) positive results from the last financial year, under the conditions referred to in Article 8 of this Notice; f) provisional positive results of the current financial year, under the conditions referred to in Article 8 of this Notice.
ARTICLE 6
Negative Elements of Own Funds
The following are considered negative elements of own funds:
a) treasury shares, at their book value; b) other own elements falling under the previous article, at their book value; c) intangible assets; d) carried-forward negative results from previous financial years; e) negative results from the last financial year; f) negative results of the current financial year, at the end of the month; g) the value of shortfalls identified by the positive difference between the amount of the requirements referred to in paragraph 1 of Article 9 of this Notice.
ARTICLE 7
Calculation of Own Funds
The own funds of exchange offices are determined by deducting the elements provided for in Article 6 of this Notice from the positive own funds. Electronic edition by Pandora Box, Lda. 3518 I SERIES — NUMBER 237
ARTICLE 8
Treatment of Results in Own Funds
Provisional positive results of the current financial year or positive results from the last financial year shall only be considered as own funds if they have been:
a) determined after all costs attributable to the reference period have been accounted for and all rules regarding the establishment of provisions, or impairment, where applicable, and allocations for amortization have been complied with; b) reduced by the value of foreseeable taxes and dividends, calculated proportionally to the period to which they refer; c) accepted by the Bank of Mozambique, without prejudice to the audit of accounts by an external auditor.
ARTICLE 9
Limits on Foreign Exchange Position

1. Exchange offices must not present, at the close of each day, an aggregate net foreign exchange position exceeding their own funds.
2. Exchange offices must maintain an updated record of transactions carried out, containing, for each transaction, inter alia, the date, amount, currencies traded, exchange rates, and client identification.
   ARTICLE 10
   Submission of Information
3. Exchange offices must submit to the Bank of Mozambique the following reports:
   a) Foreign exchange position report, on a daily basis; b) Own funds report, on a monthly basis, referring to the last day of each month, and within the following 15 days.
4. The reports referred to in the preceding paragraph must be submitted using the Bank Supervision Application (BSA).
   CHAPTER III
   Final Provisions
   ARTICLE 11
   Instructions
   The Bank of Mozambique issues by Circular the instructions necessary for compliance with this Notice.
   ARTICLE 12
   Sanctioning Regime
   Failure to comply with the provisions of this Notice constitutes an offense punishable under the Law on Credit Institutions and Financial Companies.
   ARTICLE 13
   Repeal
   Notice No. 10/GGBM/95, of September 1, which determines the foreign exchange position limit for Exchange Offices, is hereby repealed.
   ARTICLE 14
   Entry into Force
   This Notice enters into force on the date of its publication.
   ARTICLE 15
   Clarification of Doubts
   Doubts regarding the interpretation and application of this Notice shall be submitted to the Prudential Supervision Department of the Bank of Mozambique. Maputo, September 21, 2023. — Governor, Rogério Lucas Zandamela. Notice No. 8/GBM/2023 of December 11 Given the need to determine the specific prudential ratios and limits for financial leasing companies, the Bank of Mozambique, in exercise of the powers conferred upon it by Article 85 of Law No. 20/2020, of December 31, the Law on Credit Institutions and Financial Companies, determines:
   CHAPTER I
   General Provisions
   ARTICLE 1
   Subject Matter
   This Notice establishes the prudential ratios and limits applicable to financial leasing companies.
   ARTICLE 2
   Scope
   This Notice applies to financial leasing companies in pursuing their corporate purpose, as established in the Regulations of the Law on Credit Institutions and Financial Companies.
   ARTICLE 3
   Duty of Continuous Compliance
   Financial leasing companies must continuously and permanently observe the ratios and limits established in this Notice.
   CHAPTER II
   Prudential Ratios and Limits for Financial Leasing Companies
   ARTICLE 4
   Prudential Limits Applicable to Financial Leasing Companies The prudential ratios and limits of credit institutions shall apply to financial leasing companies, with the necessary adaptations, provided they do not contradict the provisions of this Notice.
   ARTICLE 5
   Capital and Own Funds
5. Financial leasing companies shall adopt the fund regime provided for in Article 5 of Notice No. 9/GBM/2017, of June 5.
   Electronic edition by Pandora Box, Lda.
   DECEMBER 11, 2023 3519
6. Basic own funds (Tier 1 Capital) must correspond to at least 50% of total own funds.
7. Core basic own funds (Tier 1 Core Capital) must correspond to at least 50% of basic own funds (Tier 1 Capital).
8. Supplementary own funds must not exceed the equivalent of 50% of total own funds.
9. The elements indicated in letters m) to p) of Article 3 of Notice No. 8/GBM/2017, of June 2, may only be considered up to 50% of basic own funds.
   ARTICLE 6
   Solvency Ratio
   Financial leasing companies must maintain a capital level compatible with the nature and scale of their operations, as well as the inherent risks, maintaining a global solvency ratio equal to or greater than 8% and a basic solvency ratio equal to or greater than 4%, calculated in accordance with Article 7 of Notice No. 9/GBM/2017, of June 5.
   ARTICLE 7
   Limits on Fixed Assets
10. The net value of fixed assets of financial leasing companies must not exceed the amount of their respective own funds.
11. The limit provided for in the preceding paragraph may be exceeded in the following situations:
    a) Fixed assets received as a result of repayment of own credit and returns, with resulting situations to be regularized within three years, after which the deduction provided for in letter a) of paragraph 4 of Article 8 of Notice No. 8/GBM/2017, of June 2, shall apply; b) Fixed assets covered by own funds, in accordance with letter b) of paragraph 4 of Article 8 of Notice No. 8/GBM/2017, of June 2.
12. Without prejudice to the discipline provided for in the preceding paragraphs, financial leasing companies must carry out revaluation of fixed assets received in repayment of own credit and by way of return, as well as guarantees granted upon the execution of financial leasing contracts.
13. The revaluations indicated in the preceding paragraph must be carried out by financial leasing companies frequently, at least once every three years.
14. The frequency of revaluations may be reduced if market conditions are subject to significant changes.
    ARTICLE 8
    Fixed Asset Limit in the Execution of Other Leasing Operations
15. Without prejudice to the provisions of the previous article, in the context of carrying out other leasing operations provided for in Article 33 of the Regulations of the Law on Credit Institutions and Financial Companies, a maximum limit of 20% of the total balance of financial leasing exposure must be observed.
16. The assets subject to financial leasing under the preceding paragraph must be maintained in fixed assets and excluded from the calculation of the limit provided for in paragraph 2 of Article 7 of this Notice.
    CHAPTER III
    Criteria for Weighted Asset Classification, Credit Provisioning, and Accounting
    ARTICLE 9
    Classification of Operations and Credit Provisioning
17. Financial leasing companies must determine risk-weighted assets taking into account the discipline established for the calculation base for determining minimum capital requirements for credit risk coverage, in accordance with Notice No. 11/GBM/2013, of December 31.
18. Financial leasing companies must classify credits related to financial leasing operations, creating respective provisions based on the level of risk assumed.
19. The classification indicated in the preceding paragraph shall comply with the provisions of Article 6 of Notice No. 16/GBM/2013, of December 31, which establishes the Regime on Minimum Regulatory Provisions.
    ARTICLE 10
    Accounting Treatment of Financial Leasing
    Financial leasing companies must carry out the accounting registration of their operations in accordance with the standards governing the accounting of institutions subject to the supervision of the Bank of Mozambique.
    CHAPTER IV
    Final Provisions
    ARTICLE 11
    Change in the Calculation Base for Prudential Ratios and Limits The Bank of Mozambique may order the adjustment of the calculation bases for the limits established in this Notice whenever conditions justifying the observance of prudential principles warrant it.
    ARTICLE 12
    Sanctioning Regime
    Failure to comply with the provisions of this Notice constitutes an offense punishable under the Law on Credit Institutions and Financial Companies.
    ARTICLE 13
    Entry into Force
    This Notice enters into force on the date of its publication.
    ARTICLE 14
    Clarification of Doubts
    Doubts regarding the interpretation and application of this Notice shall be submitted to the Prudential Supervision Department of the Bank of Mozambique. Maputo, September 21, 2023. — Governor, Rogério Lucas Zandamela. Electronic edition by Pandora Box, Lda. Price — 20.00 MT NATIONAL PRESS OF MOZAMBIQUE, S.A. Electronic edition by Pandora Box, Lda.