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Yaoundé - 25 May 2020 -
Finance

Cemac: Banks’ adoption of the repo agreements boosted interbank transactions by 300% in 2019

Cemac: Banks’ adoption of the repo agreements boosted interbank transactions by 300% in 2019
  • Comments   -   Thursday, 14 May 2020 14:10

(Business in Cameroon) - In 2019, the repurchase transactions (repo) carried out on the interbank market of the CEMAC zone reached XAF2,546 billion. By the end of 2018, operations of the same type were only XAF17.4 billion, revealing an exponential increase of nearly XAF2,430 billion over one year.

According to the BEAC’s March 2020 monetary policy report, the impressive evolution of repo transactions led to "a sharp increase in the cumulative volume of interbank transactions as at 31 December 2019, to XAF 3,500.3 billion (360 operations), compared to XAF928.6 billion by the same period a year earlier." This represents about a 300% rise within 12 months.

BEAC experts explain that the repurchase agreement is an interbank financing technique characterized by an exchange of negotiable securities for cash, for a fixed period. This transaction requires the signature of a framework agreement between the parties.

It allows the lender to automatically transfer ownership of the securities placed as collateral to the borrower, once the date of repayment of the claim has fallen due. "You don't even have to go to court to obtain this transfer of ownership,” explained Aboubakar Salao, a member of the BEAC audit committee, during a seminar organized on the theme "Capital Markets in Central Africa: Challenges and Opportunities.” 

According to the same source, this system has made up for the lack of secure financial products, which used to affect the interbank market in the CEMAC area. This is reassuring for the lending banks, which are increasingly loaning to their peers in search of liquidity.

Brice R. Mbodiam

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