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Angola Central Bank Orders Two Lenders to Raise Capital Levels

Angola Central Bank Orders Two Lenders to Raise Capital Levels

(Bloomberg) -- Angola’s central bank ordered state-owned lender Banco de Poupanca e Credito and Banco Economico to raise their capital levels to comply with the minimum requirement after carrying out an assessment of the industry.

While the review of 13 banks’ asset quality showed the “system is globally robust,” most lenders need to improve their credit-risk procedures, the central bank said in a statement on its website.

Bad loans have crippled the banking sector of Africa’s second-biggest oil producer after a sharp drop in crude prices in mid-2014 triggered a four-year economic recession. The slump prompted the country to seek assistance from the International Monetary Fund in 2018 and to float its currency, the kwanza, the following year.

Angola Central Bank Orders Two Lenders to Raise Capital Levels

The review, which was based on data from the banks available on Dec. 31, 2018 found that some had a “very relevant exposure” of loans to shareholders and these need to be cut. It said Banco Poupanca e Credito and Banco Economico were marginally below the minimum capital requirement and must increase this to the required threshold by the end of June.

Banco Economico, formerly known as Banco Espirito Santo Angola, said in a statement on Tuesday it would comply by the end of June. Jornal de Angola earlier reported that Banco Poupanca e Credito was preparing legal procedures to recover bad loans.

Angola has a total of 26 lenders after the central bank revoked three banking licenses last year.

The reforms aim to, among other things, restore the industry’s credibility and help Angolan lenders re-establish ties with foreign banks that stopped supplying dollars to the nation. In 2016, Deutsche Bank AG was the last international lender to do so.

To contact the reporters on this story: Henrique Almeida in Lisbon at halmeida5@bloomberg.net;Candido Mendes in Luanda at cmendes6@bloomberg.net

To contact the editors responsible for this story: Joao Lima at jlima1@bloomberg.net, Hilton Shone, Pauline Bax

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