BNA advises Sonangol to follow Banco Económico's capital increase

"If Sonangol or its entities follow the capital increase, it remains. If they decide not to monitor the capital increase, their participation is diluted and the State, via Sonangol, will no longer be present", said José de Lima Massano in a interview with TV Zimbo, quoted by Jornal de Angola.

The capital increase of Banco Económico (BE), formerly BESA (Banco Espírito Santo de Angola) is a requirement of the central bank in the Recapitalization and Restructuring Plan approved on December 21, 2021, following the quality assessment made of banking assets in 2018, when the BNA detected a deficiency in its capitals.

Sonangol is BE's largest shareholder, with 70.38 percent of the bank's capital.

The decision will have an impact on Novobanco, which owns 9.72 percent of the institution and on the Portuguese Resolution Fund, as the capital increase will involve the conversion of the loan of US$340 million made by Novo Banco to the former Banco Espírito Santo Angola (BESA) in 2014 and depositors' money.

The increase in BE's share capital by at least 1.1 billion kwanzas is one of the "corrective intervention measures" decided on by the BNA Board of Directors on 29 October.

In addition to the conversion of the Novo Banco loan, the BNA estimates that the increase in share capital can also be achieved with the "partial conversion into capital, through negotiation", of depositors' deposits with "a balance equal to or greater than the equivalent of three thousand millions of kwanzas".

From the BNA's point of view, the increase in BE's capital under these terms is intended to "guarantee" that the financial institution "complyes with all current regulatory requirements".

Banco Económico must also issue "bonds convertible into shares up to the amount of 50 billion kwanzas to be voluntarily subscribed by depositors or other interested entities, with a maturity of 10 years" and "defer, by the linear method and in equal annual installments, the recognition of impairments over a period of five years with reference to December 31, 2020".