Regulation No. 003/2015 on Capital Requirements for Credit, Off-Balance Sheet, Operational Risks and Fixed Assets

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BANQUE CENTRALE DES COMORES

REGULATION No. 003 /2015/BCC/DSBR

RELATING TO CAPITAL REQUIREMENTS FOR THE COVERAGE OF CREDIT AND OFF-BALANCE SHEET RISKS, OPERATIONAL RISKS, AND FIXED ASSETS IN APPLICATION OF LAW 13-003/AU.

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Having regard to Law 80-08 of June 26, 1980, relating to currency and the role of the Central Bank of the Comoros in the control of banks and financial institutions, credit, and foreign exchange, particularly Article 7;

Having regard to Law 13-003/AU regulating the activities of Financial Institutions, particularly Articles 26, 29, 46, 48, and 103;

Having regard to Law 12-008/AU of June 28, 2012, combating money laundering and the financing of terrorism;

Having regard to Law 12-011/AU of June 26, 2012, regulating and organizing credit leasing;

THE GOVERNOR OF THE CENTRAL BANK OF THE COMOROS;

Sets the rules for calculating capital requirements for the coverage of credit and off-balance sheet risks, operational risks, and fixed assets of credit institutions in application of Law 13-003/AU.

CHAPTER 1
GENERAL PROVISIONS

Article 1

Capital requirements are composed of:

1. A requirement for the coverage of credit and off-balance sheet risks, corresponding to the solvency ratio;
2. A requirement for the coverage of operational risks, which is added to the previous one;
3. A requirement for the coverage of net fixed assets by capital, applicable when the amount of capital required under points 1 and 2 above is insufficient.

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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 2

The calculation of capital requirements is carried out on an individual, aggregated, or consolidated basis, under the following conditions:

On an individual basis:
Banks, financial companies, specialized financial institutions, and decentralized financial institutions (DFIs) affiliated with an Union whose total balance sheet exceeds 20% of the total aggregated balance sheet of the network;

On an aggregated basis:
Each DFI network taken as a whole;

On a consolidated basis:
Credit institutions having financial subsidiaries on national territory or abroad.

CHAPTER 2
CAPITAL REQUIREMENTS FOR THE COVERAGE OF CREDIT AND OFF-BALANCE SHEET RISKS

Article 3

Credit institutions must at all times respect a solvency ratio greater than or equal to 10%.

Depending on particular circumstances, the Central Bank may require a credit institution to respect a higher ratio.

Article 4

The solvency ratio is calculated as follows:

The ratio is defined as the ratio between the total amount of regulatory capital and the amount of credit and off-balance sheet risks they support due to their activities:

• The capital retained in the numerator of the solvency ratio is that determined under the conditions set by the regulation relating to capital;

• The credit and off-balance sheet risks retained in the denominator of the solvency ratio correspond to the sum of credit and off-balance sheet risk exposures, resulting from balance sheet and off-balance sheet commitments, weighted in accordance with the provisions of Article 5 below.

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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 5

The weightings applicable to balance sheet and off-balance sheet commitments are:

1°) Weighting at 0%

a. Claims or commitments on the State, as well as those guaranteed by the State or by the pledge of debt securities issued by the State; b. Claims on the Central Bank of the Comoros or other central banks or guaranteed by the pledge of debt securities issued by Central Banks;
c. Claims guaranteed by the pledge of deposits and/or time accounts constituted with the credit institution, denominated in the same currency as the claims they guarantee, and provided that the value of the guarantee covers the total amount of the loan;
d. Claims guaranteed by the pledge of deposit certificates or similar securities issued by the credit institution and deposited with itself.

2°) Weighting at 20%

e. Claims guaranteed by the pledge of deposits and/or time accounts constituted with the credit institution, denominated in a currency other than the claims they guarantee; f. Bank counter-guarantees emanating from international cooperation financial institutions or regional development banks; g. Claims guaranteed by a first-demand bank counter-guarantee emanating from a credit institution authorized in the Union of the Comoros or a foreign credit institution.

3°) Weighting at 35%

h. Claims secured by a pledge of gold, provided that the market value covers the total amount of the loan;
i. Claims or commitments on Financial Intermediaries.

4°) Weighting at 70%

j. Claims of any nature and off-balance sheet commitments on territorial administrations and Comorian local authorities; k. Claims or commitments on public enterprises under Comorian law;
l. Claims or commitments on first-signature international companies;
m. Claims fully guaranteed by a first-ranking mortgage on land free of any occupation. n. Claims fully guaranteed by a first-ranking mortgage on a residential building to be occupied or rented out by the counterparty; o. Claims fully guaranteed by a first-ranking mortgage on a building intended entirely for productive activities. p. Claims guaranteed by securities held in the portfolio and participation securities, except those which are deducted in the calculation of capital, under the conditions fixed by the regulation relating to capital;

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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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5°) Weighting at 100%

q. Customer loans not benefiting from any guarantee; r. Doubtful claims net of provisions; s. Assets corresponding to various debtors and regularization accounts; t. Goods leased under credit leasing; u. Guarantees, avals, and other off-balance sheet guarantee or financing commitments for or in favor of customers, for their net amount of provisions.

The commitments mentioned above correspond to guarantee or financing commitments given.

Article 6

For DFI networks, the determination of the aggregated solvency ratio must eliminate reciprocal operations between the Union and affiliated DFIs.

CHAPTER 3
CAPITAL REQUIREMENTS FOR THE COVERAGE OF OPERATIONAL RISK

Article 7

In addition to the capital requirement for the calculation of the solvency ratio provided by this regulation, credit institutions are required to calculate a specific capital requirement for the coverage of their operational risks.

Operational risks are defined by the regulation relating to the internal control, management, and risk mastery device.

Article 8

The calculation of capital requirements for the coverage of operational risks results from a standardized approach, whereby a weighting of 15% is applied to the annual average of the algebraic sum of banking operating income and expenses related to the last three fiscal years {RO = (n-3+n-2+n-1/3)*15%}.

CHAPTER 4
COVERAGE OF NET FIXED ASSETS BY CAPITAL

Article 9

Credit institutions must ensure at all times that the amount of their regulatory capital fully covers the net value of fixed assets appearing on their balance sheet.

In the event that the amount of regulatory capital is less than the net value of fixed assets, institutions are subject to an additional requirement corresponding to the difference.

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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 10

Credit institutions must transmit to the Central Bank semi-annually the statement relating to capital requirements provided by this regulation, no later than 30 days after the date of the closing of accounts, according to the declaration model attached as an annex.

Article 11

This regulation cancels and replaces Instructions No. 006/2004/COB, No. 008/2004/COB and Circulars No. 006/2004/COB, No. 011/2004/COB.

It enters into force as of its date of signature.

[IMAGE: Seal of the Central Bank of the Comores] Moroni, January 28, 2015

THE GOVERNOR
Mzé Abdou Mohamed Chanfiou

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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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DECLARATIVE STATEMENT OF CAPITAL REQUIREMENTS OF CREDIT INSTITUTIONS (Semi-annual Declaration) (Regulation No. 003 /2015/BCC/DSBR)

Declaring Institution:
Situation closed as of:

REGULATORY CAPITAL
CREDIT RISK (CR)	NET BOOK VALUE	WEIGHTING (%)	NET WEIGHTED RISK
Claims or commitments on the State or the Treasury of the Union	0	0	0
Claims on the Central Banks of Comoros and other Central Banks	0	0	0
Claims fully guaranteed by a cash pledge denominated in Comorian Franc	0	0	0
Claims guaranteed by the pledge of deposit certificates issued by the CI and deposited with itself	0	20	0
Claims guaranteed by a cash pledge denominated in a currency other than the claims they guarantee	0	20	0
Counter-guarantees emanating from international cooperation DFIs or regional development banks	0	20	0
Claims guaranteed by a bank counter-guarantee emanating from a Comorian law credit institution	0	20	0
Claims guaranteed by a bank counter-guarantee emanating from a first-signature foreign law credit institution	0	20	0
Claims guaranteed by a gold pledge	0	35	0
Claims or commitments on financial intermediaries	0	35	0
Claims or commitments on territorial administrations and local public authorities	0	70	0
Claims or commitments on public enterprises under Comorian law	0	70	0
Customer claims guaranteed by a first-ranking mortgage on bare land	0	70	0
Customer claims guaranteed by first-signature international companies	0	70	0
Customer claims guaranteed by a first-ranking mortgage on a residential building	0	70	0
Customer claims guaranteed by a first-ranking mortgage on a building for productive activities	0	70	0
Claims guaranteed by securities held in the portfolio or participation securities	0	70	0
Other Customer Loans	0	100	0
Doubtful claims net of provisions	0	100	0
Assets corresponding to various debtors and regularization accounts	0	100	0
Goods leased under credit leasing	0	100	0
Sub-total (1): On-Balance Sheet Risks	0		0

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Guarantee or financing commitments on the Treasury or State	0	0	0
Guarantee or financing commitments in favor of Comorian law credit institutions	0	20	0
Guarantee or financing commitments in favor of first-signature foreign law credit institutions	0	20	0
Guarantee or financing commitments on financial intermediaries	0	35	0
Guarantee or financing commitments on territorial administrations or local public authorities	0	70	0
Guarantee or financing commitments on public enterprises under Comorian law	0	70	0
Guarantee or financing commitments in favor of other customers	0	100	0
Sub-total (2): Off-Balance Sheet Risks	0		0
TOTAL I (1 + 2): CREDIT RISK			0
*TOTAL II: Capital requirements for the coverage of credit risk = TOTAL I 10%			0

OPERATIONAL RISK (OR)
Year	Year n-3	Year n-2	Year n-1
Total amount of banking operating income	0	0	0
Total amount of banking operating expenses	0	0	0
Sub-total (3): Sum of banking operating income and expenses	0	0	0
Sub-total (4): Annual average of the sum of operating income and expenses of the last three fiscal years = (n-3+n-2+n-1/3)			0
TOTAL III: Capital requirements for the coverage of operational risks = sub-total 4*15%			0
TOTAL IV: Capital requirements for the coverage of credit and operational risk (TOTAL II + III)			0
CAPITAL DECLARED in accordance with Regulation No. .............			0
SURPLUS OR SHORTFALL of capital for the coverage of credit risks			0
SURPLUS OR SHORTFALL of capital for the coverage of credit and operational risks			0
TOTAL V: Amount of net fixed assets after depreciation			0
SURPLUS OR SHORTFALL of capital for the coverage of net fixed assets			0

IF E52 < 0: Shortfall of capital for the coverage of credit risk IF E53 < 0: Shortfall of capital for the coverage of credit and operational risks IF E56 < 0: Shortfall of capital for the coverage of net fixed assets after depreciation ---