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CEMAC: Banking watchdog COBAC lowers capital conservation buffer due to negative impacts of Covid-19 on credit and microfinance institutions

CEMAC: Banking watchdog COBAC lowers capital conservation buffer due to negative impacts of Covid-19 on credit and microfinance institutions
  • Comments   -   Monday, 25 October 2021 15:07

(Business in Cameroon) - On October 21, Halilou Yerima Boubakary (photo), secretary-general of the Central African Banking Commission (COBAC) informed the Managing Directors of credit and microfinance institutions operating in the CEMAC region about the easing of prudential regulations. 

“The capital conservation buffer, provided by article 25 of the Cobac R-2016/03 regulation governing credit institutions is lowered from 2.5% to 2% till Jun 30, 2022,”   COBAC documents inform. This rate lowering, therefore, released the capital conservation pressure on credit institutions, which can then use the freed resources for other operations. 

According to the COBAC, the decision was taken after a study from the secretary-general revealed that the pandemic is having some devastating impacts on banks and the outlooks are not that promising. The banking sector regulator nevertheless failed to mention the real extent of the impacts the pandemic has had on banks and microfinance institutions in the subregion. 

Similarly, COBAC said, the provisions of decision D-2020/104 of July 30, 2020, on adaptation to prudential regulation measures are extended to June 30, 2022. These measures prescribe, among other things, that the institutions subject to these measures must send to the general secretariat of COBAC, a weekly report of their cash flow situation and a monthly report of credits impacted by the economic situation related to Covid-19. Also, no credit institution may distribute a dividend based on the results of the financial year concerned without a recommendation from the COBAC. 

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