Regulation N°001-2024/BCC/DRRB on the Conditions and Procedures for the Preparation and Submission of Recovery Plans by Financial Institutions

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Regulation No. 001-2024/BCC/DRRB

Regarding the conditions and procedures for the preparation and submission of recovery plans by financial institutions

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Having regard to the statutes of the Central Bank of the Comores;

Having regard to Law 20-027/AU of December 29, 2020, on the recovery and resolution of Financial Institutions, specifically Article 4;

THE GOVERNOR OF THE CENTRAL BANK OF THE COMORES

Sets the conditions and procedures for the preparation and submission of recovery plans by financial institutions.

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CHAPTER I: GENERAL PROVISIONS

Article 1: Purpose

The purpose of this regulation is to define the procedures for the preparation and communication of recovery plans for credit institutions, as defined in Article 3 of Law No. 13-003/AU relating to banking law, licensed within the Union of the Comoros.

Article 2: Scope of Application

The provisions of this regulation apply to credit institutions whose total balance sheet exceeds 10% of the total balance sheet of credit institutions. These provisions remain applicable to subject institutions whose total balance sheet becomes lower than this threshold.

These provisions may subsequently be extended to other financial institutions by circular.

These provisions do not apply to institutions subject to resolution measures implemented by the BCC.

The BCC establishes annually the list of subject institutions and notifies them of its decision.

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Place de France. BP 405 MORONI
TEL : (269) 773 18 14 - (269) 773 10 02 - FAX : (269) 773 03 49 E-mail : secretariat@banque-comores.km Site : www. banque-comores.km

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Article 3: Definitions

Recovery Plan: A plan prepared by the subject institution to identify measures that may be taken on its own initiative to address a deterioration in its financial situation.

Fundamental Activities: The lines of activity and corresponding services that represent a significant source of revenue or profit for the institution.

Critical Functions: The activities, services, and operations carried out on behalf of third parties, the interruption of which would disrupt vital services for the functioning of the domestic real economy and financial stability due to the size of the institution, its market share, its internal and external interconnections, and its complexity.

Significant Entity: Any natural or legal person that:

• contributes significantly to the results or financing of the institution;
• holds directly or indirectly a significant share of the assets exploited by the institution or its capital;
• exercises fundamental activities for the institution;
• exercises key functions centrally for the institution in operational, administrative, or risk management areas;
• cannot be dismantled or liquidated without posing a major risk to the entire institution.

Risk Profile: The assessment, by risk categories, of the level of gross risks of any nature to which an institution is exposed, i.e., before the application of any mitigation measures, and of net risks, after taking into account the mitigation measures implemented, based on the current situation of the institution and its development prospects.

CHAPTER II: PROCEDURES FOR THE PREPARATION AND COMMUNICATION OF RECOVERY PLANS

Article 4: Obligation to Prepare a Recovery Plan

Subject institutions are required to prepare a recovery plan and keep it regularly updated.

The plan is prepared according to the template annexed to this regulation and in accordance with the rules defined by this template.

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Place de France. BP 405 MORONI
TEL : (269) 773 18 14 - (269) 773 10 02 - FAX : (269) 773 03 49 E-mail : secretariat@banque-comores.km Site : www. banque-comores.km

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The recovery plan must exclude any assumption of recourse to financial support from the State, except for support that may be provided by it in its capacity as a shareholder.

Article 5: Procedure for Preparing the Recovery Plan

The Board of Directors ensures the preparation of the plan, is responsible for its approval before transmission to the BCC and for its monitoring, and ensures its update.

The Risk Management Committee, or the committee acting in its place, and the head of internal control of the institution must be associated with the preparation of the plan and issue an opinion on the final document.

Article 6: Principle of Proportionality

Subject institutions prepare a recovery plan adapted to their size, structure, the nature and complexity of their activities, as well as their risk profile.

It is up to the institutions to supplement the provisions provided by the template according to their characteristics and risk profiles.

Article 7: Periodicity and Deadlines for Submission of the Plan and Monitoring Indicators

Subject institutions must submit to the BCC, every two years, at the latest by June 30, their recovery plans validated by the Board of Directors.

Subject institutions submit to the BCC the monitoring indicators of the recovery plan, calculated as of June 30 and December 31, at the latest by the 20th of the following month, in accordance with Annex 2 attached to this regulation. They also transmit to the BCC the final monitoring indicators as of December 31 calculated based on certified financial statements.

The reference rates appearing in Annex 2 are provided for information purposes, with each institution responsible for setting its own rates.

Article 8: Evaluation of the Recovery Plan

The BCC evaluates the recovery plans submitted by subject institutions.

The BCC may request the communication by subjects of all additional documents and information it deems necessary for the examination of the recovery plan. It may invite the institution to submit a modified recovery plan when it considers that the submitted document presents deficiencies or that there are obstacles to its implementation.

The BCC may, where appropriate, hear the institution to gather the necessary clarifications for the proper understanding and evaluation of the recovery plan.

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Place de France. BP 405 MORONI
TEL : (269) 773 18 14 - (269) 773 10 02 - FAX : (269) 773 03 49 E-mail : secretariat@banque-comores.km Site : www. banque-comores.km

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Article 9: Update of the Recovery Plan

Subject institutions must revise their recovery plans when a modification occurs or is foreseeable in their activities or environment that is likely to have a significant impact on the effectiveness of said plan or on the conditions of its implementation.

The BCC may require an institution to update its recovery plan if it deems it necessary.

The communication to the BCC of the updated recovery plan must be carried out by the institution within two months following the date of occurrence of the event or the receipt of the BCC's request. If it is a foreseeable event, the reference date is the date on which the institution became aware of the prospect of this event.

CHAPTER III: TRANSITIONAL AND FINAL PROVISIONS

Article 10: Transitional Provisions

The date for the first communication of recovery plans is set at June 30, 2025. It applies to institutions whose total balance sheet as of December 31, 2023, exceeds 10% of the total balance sheet of the banking system.

The first declarative statement of the monitoring indicators of the recovery plan must be communicated to the BCC at the latest by July 20, 2025, based on the financial statements as of June 30, 2025.

Article 11: Entry into Force

This regulation, including its annexes, enters into force as of its date of signature.

Moroni, August 14, 2024

[Signature and seal of the Central Bank of the Comores] Dr. YOUNOUSSA Imani

Annex I: Template for the Recovery Plan of Financial Institutions Annex II: Declarative Statement of Monitoring Indicators for the Recovery Plan

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Place de France. BP 405 MORONI
TEL : (269) 773 18 14 - (269) 773 10 02 - FAX : (269) 773 03 49 E-mail : secretariat@banque-comores.km Site : www. banque-comores.km ---