By way of Order 1/24, of 21 February 2024, the Angolan Central Bank (BNA) has issued guidelines for the “Recovery Plans” to be submitted by financial institutions (banks) under the Financial Institutions Law. This article gives an outline of the Order.
1- The Recovery Plan must be submitted annually to BNA until 30 June of the year following the year to which the plan refers.
2- The Recovery Plan must have been audited by an independent audit firm.
3- Banks may apply for a dispensation from submitting the Recovery Plan by a duly grounded request to BNA presented by no later than 30 April. The dispensation is valid for 1 year only and may be cancelled at any time by BNA in case the circumstances that justified the dispensation cease to exist.
4- The Recovery Plan must provide for measures allowing the bank to restore its viability in periods of financial stress, including, without limitation, the following:
- Increase of equity or liquidity ratios;
- Asset disposal;
- Debt refinancing;
- Debt restructuring;
- Financial support from Intra-group entities;
- Access to external liquidity lines;
- Changes to business model or organizational or functional modifications.
The plan must contemplate concrete measures to, inter alia, restructure business verticals, merge or spin of business units, debt restructuring including conversion of debt into equity, identification of disposable assets, etc, including a risk assessment of such measures.
5- The bank is required to revise/update the Recovery Plan in the following cases:
- Any of the circumstances/assumptions under which the plan was prepared have changed so as to cause a material impact on the plan’s execution;
- The bank has suffered a financial, structural or organizational modification which has a material impact on the plan;
- Upon request by BNA.
An updated plan must be submitted within 30 days of the above events.
6- Banks must implement systems to monitor implementation of the Recovery Plan, including risks monitoring, changes to the bank’ economic or liquidity situation, market and business model modifications, among others.
7- Banks must have systems in place that allow for the timely generation of information and the sharing of such information to BNA as necessary: this includes information on (i) risks associated with intra-group loans or other transactions; (ii) liquid assets of parent company and subsidiaries, (iii) any off-balance sheet activities or transactions, (iv) exposure levels to major clients and other banks.
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