In a notice published on its website this Monday, the BNA establishes the terms and conditions for the granting of credit by banking financial institutions, including the provision of guarantees, to related parties and holders of relevant management functions or positions.
The BNA establishes that transactions must be carried out based on risk assessment and under conditions identical to those applied to unrelated parties, and must be approved, as well as the credit write-off “by a qualified majority of at least two thirds of the members of the management body and with the favorable opinion of the Institution's supervisory body”.
On the other hand, banks must ensure that members potentially with conflicts of interest “are excluded from the approval process for the granting and management of credits or other related party transactions”.
The total credit exposures, including the provision of guarantees with related parties and holders of relevant functions or positions, may not exceed 15 percent of the main equity tier 1 (the highest quality funds that allow the bank to continue to carry out its activity), less the value of the shares held in other institutions.
Holders of qualifying shares now have a limit of 1 percent on individual credit arrangements and 5 percent on legal entity credit arrangements, while other related parties not holding qualifying shares, including holders of relevant management functions or positions, have a limit of 1 percent of Tier 1 capital.
If exposures exceed the established limits, the bank will have to present the regulator with an action plan that contemplates their regularization within a maximum of six months.
“During the non-compliance referred to in the previous number, the Institutions are subject to the application of an immediate penalty of own funds requirements, without prejudice to others that may be applied by the National Bank of Angola”, reads the notice.
Credits granted or approved to date that exceed the defined limits may remain in force under the contracted terms, and the amount or term may not be increased, nor may the credit be renewed.
Previously, the sum of the total credit value could reach 20 percent of own funds, with maximum limits of 5 percent when taking out credit by individuals and 10 percent when taking out credit by legal entities.
Banks will have to maintain an updated list of related parties including holders of relevant management functions or positions (but also holders of qualified or non-qualified shareholdings and members of the supervisory and management bodies of financial institutions and their family members, for example) and “establish procedures to identify individual and aggregate exposures, as well as other transactions with related parties” and their respective amounts.
Audits of transactions with related parties and holders of relevant management functions or positions will also have to be carried out annually.
