General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
June 11, 2018

IMF published its staff report and selected issues report under the 2018 Article IV consultation with Angola. Directors stressed the importance of preserving the health of the banking sector, including the need for concrete actions to complete asset quality review and to strengthen crisis management, emergency liquidity assistance, and the anti-money laundering and combating the financing of terrorism (AML/CFT) frameworks. They supported ongoing efforts to reinforce capital and liquidity buffers while strengthening governance at the state-owned banks.

With respect to developments in the banking sector, the staff report notes that the National Bank of Angola (BNA) increased by threefold the minimum regulatory capital requirement for commercial banks to be met by the end of 2018, which could lead to some consolidation in the sector. In addition, banks continue to suffer from subdued lending and, in the case of state-owned banks, very high non-performing loans (NPLs). The economy’s heavy dependence on oil is a challenge for banks. Oil price volatility and pro-cyclical public spending create feedback loops for liquidity and credit, leading to windfalls for some banks while building vulnerabilities for others, especially state-owned banks. The key recommendations of IMF for strengthening the banking system are as follows:

  • Intensifying efforts to complete the second phase of bank asset quality reviews, with a view to gauge capitalization needs of banks
  • Pursuing a swift resolution of NPLs to strengthen bank balance sheets and ensuring enforcement of loan provisioning and monitoring loan restructuring
  • Raising the efficiency of state-owned banks by fully implementing their restructuring plans
  • Monitoring liquidity position of banks in both foreign and local currency and taking prompt corrective action when problems are identified
  • Strengthening crisis management and emergency liquidity assistance frameworks

The selected issues report examines the impact of lower oil prices on banks by articulating the transmission mechanism of the shock, stress testing the resilience of the banking sector over time, and investigating the nexus between the sovereign and banks. Static event analyses and stress test results confirm a deterioration of banks’ soundness indicators as lower oil prices linger—and this is more pronounced for state-owned banks. Moreover, sectoral balance sheet analyses confirm growing exposures of banks to the sovereign. Panel regressions on the performance of banks show that weakly capitalized and poorly run banks are adversely impacted while suggesting that sound macroeconomic policies should help mitigate the impact of the shock.

Stress tests conducted for individual banks for successive years are used to determine the evolution of banks resilience in the wake of the oil price shock. The tests focus on credit risk. The credit risk shock comprised an aggregate increase in NPLs focusing on downgrade of classified loans across the entire credit spectrum. Stress tests confirm a deteriorating capacity to withstand oil price shocks. The capital position of the banking system declines by 6 percentage points in 2013 but overall banks remain well-capitalized. Reverse stress testing was also used to gauge bank resilience to the oil price shock. 


Related Links

Keywords: Middle East and Africa, Angola, Banking, NPLs, Stress Testing, Financial Stability, IMF

Related Articles

FDIC Consults on Approach to Resolution Planning for IDIs

FDIC approved an Advance Notice of Proposed Rulemaking (ANPR) and is seeking comment on ways to tailor and improve its rule requiring certain insured depository institutions (IDIs) to submit resolution plans.

April 22, 2019 WebPage Regulatory News

FDIC Specifies Submission Timeline for FFIEC 031, 041, and 051 Reports

FDIC published the financial institution letters (FIL-21-2019 and FIL-22-2019) that offer guidance on submission of Call Reports FFIEC 051, FFIEC 041, and FFIEC 031 for the first quarter of 2019.

April 19, 2019 WebPage Regulatory News

US Agencies Propose to Revise Call Reports FFIEC 031, 041, and 051

US Agencies (FDIC, FED, and OCC) proposed to revise and extend, for three years, the Call Reports FFIEC 031, FFIEC 041, and FFIEC 051.

April 19, 2019 WebPage Regulatory News

US Agencies Propose to Amend Rule on Supplementary Leverage Ratio

US Agencies (FDIC, FED, and OCC) are proposing to revise the capital requirements for supplementary leverage ratio, as required by the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.

April 18, 2019 WebPage Regulatory News

EP Resolution on Proposal for Sovereign Bond Backed Securities

The European Parliament (EP) published adopted text on the proposal for a regulation of the European Parliament and of the Council on sovereign bond-backed securities (SBBS).

April 16, 2019 WebPage Regulatory News

HKMA Decides to Maintain Countercyclical Capital Buffer at 2.5%

HKMA announced that, in accordance with the Banking (Capital) Rules, the countercyclical capital buffer (CCyB) ratio for Hong Kong remains at 2.5%.

April 16, 2019 WebPage Regulatory News

EP Approves Agreement on Package of CRD 5, CRR 2, BRRD 2, and SRMR 2

The European Parliament (EP) approved the final agreement on a package of reforms proposed by EC to strengthen the resilience and resolvability of European banks.

April 16, 2019 WebPage Regulatory News

PRA Finalizes Policy on Approach to Managing Climate Change Risks

PRA published the policy statement PS11/19, which contains final supervisory statement (SS3/19) on enhancing banks’ and insurers’ approaches to managing the financial risks from climate change (Appendix).

April 15, 2019 WebPage Regulatory News

PRA Seeks Input and Issues Specifications for Insurance Stress Tests

PRA announced that it will conduct an insurance stress test for the largest regulated life and general insurers from July to September 2019.

April 15, 2019 WebPage Regulatory News

EBA Single Rulebook Q&A: First Update for April 2019

EBA published answers to nine questions under the Single Rulebook question and answer (Q&A) updates for this week.

April 12, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2944