Banks and Other Financial Institutions

As part of the microprudential supervision of banks and other financial institutions, Banco de Cabo Verde establishes prudential, accounting and financial rules that credit institutions, electronic money institutions, financial companies, currency exchange offices and others typified by law must comply with when operating in the financial sector.

Banco de Cabo Verde is also responsible for establishing the rules for authorizing the establishment of institutions and registration of governing body members, as well as rules for governance and internal control systems of supervised institutions.

These rules are disclosed through Banco de Cabo Verde regulations, which focus on matters within its legal authority. They may take the form of Notices, which are published in the Official Bulletin of Cabo Verde and on Banco de Cabo Verde’s website, or Technical Instructions, which aim only at regulating internal procedures of one or more entity categories, and are sent directly to the respective recipients.

Note that the regulations issued by Banco de Cabo Verde aim to complement the legal provisions that govern the financial system.

Inspection

As the supervisory authority, Banco de Cabo Verde is responsible for monitoring compliance with the laws and regulations in force in the areas under its responsibility and for prosecuting and punishing the violations found, namely:

a) Carry out inspections, inquiries or other steps that are necessary or are legally entrusted to it;

b) Initiate and conduct investigations;

c) Initiate and prepare proceedings for financial offenses;

d) Apply the corresponding sanctions for administrative offenses.

As part of its inspection duties, Banco de Cabo Verde has the power to carry out continuous monitoring and on-site, regular and extraordinary supervision of the entities subject to its supervision, as it deems necessary, even if there is no suspicion of non-compliance.

Where, as part of its inspection duties, it detects irregular situations or non-compliance, Banco de Cabo Verde shall require their correction. Banco de Cabo Verde may also sanction entities in the context of administrative offenses, by imposing fines and accessory sanctions.

Risk and Control Assessment

BCV’s microprudential supervision includes, among its objectives, identifying the main risks assumed by the supervised institutions, evaluating their control systems and analyzing their economic and financial situation, so that the supervisor can form a comprehensive opinion on the supervised institutions.

In the case of banking institutions, this supervision is conducted on a continuous basis, with the support of the Risk Assessment and Controls System (Portuguese acronym: SAR), which comprises a set of structured criteria and procedures that help the supervisory authority to consolidate and keep its knowledge about the supervised institutions’ risk profile updated, as well as identify situations that present the greatest risk in a timely manner.

The adoption of the SAR aims mainly to assist in identifying institutions that present financial, operational or regulatory compliance weaknesses, while also helping to get a more comprehensive knowledge of the dimension of the risks and the respective controls, by comparing results, thus facilitating the planning of supervision activities and a more intensive monitoring of institutions and/or areas whose risk profile requires greater attention.

Implementation Methodology

The SAR implementation methodology encompasses two main activities, – qualitative analysis and quantitative analysis, – which in turn comprise risk and control system assessment and economic and financial condition analysis, so that the supervisory authorities can comprehensively characterize the institutions.

These are independent, although interrelated, analyzes that are carried out continuously based on the qualitative and quantitative information obtained from the institutions themselves and from other available sources.

Diagram of the Methodology for Implementing Risk and Control Assessment.

Authorization

According to the definition provided for in Article 1 (i) of the Law on Financial Activities and Institutions (LAIF), financial institutions are persons or entities, whether natural or legal, public or private, that are legally authorized by Banco de Cabo Verde to carry out one or more of the financial activities listed in Article 20 (2) of the Financial System Basic Law (LBSF), namely:

a) Receipt of deposits or other repayable funds;

b) Credit operations, including granting guarantees and other commitments, financial leasing and factoring;

c) Payment services, provision of payment services, and issuance and management of other means of payment, such as paper checks, traveler’s checks and letters of credit;

d) Investment in financial instruments and provision of investment services related to these instruments;

e) Transactions, on their own account or on behalf of customers, involving money and foreign exchange market instruments, financial futures, currency options, interest rates, commodities and securities;

f) Risk-taking through insurance and reinsurance contracts and insurance brokerage;

g) Participation in issues and placements of securities and provision of related services;

h) Consulting, custody, administration and management of securities portfolios;

i) Management and consulting in the management of other assets;

j) Acting in interbank markets;

k) Leasing of movable property, under the terms allowed to financial leasing companies;

l) Transactions involving precious stones and metals;

m) Consulting of companies on capital structure, business strategy and related issues, as well as consulting and services in the area of mergers and acquisitions of companies;

n) Acquisition of equity interests in companies;

o) Provision of business information;

p) Rental of safes and custody of securities;

q) Other similar transactions not prohibited by law, as defined in a notice issued by Banco de Cabo Verde.

If you intend to pursue a financial activity in Cabo Verde, you must send a request for authorization to set up a financial institution to Banco de Cabo Verde, the authority with exclusive powers to grant the authorization.

Type of legal act: Decision to authorize or refuse authorization.

Competent authority: Banco de Cabo Verde.

Applicable legislation:

Lei de Bases do Sistema Financeiro (LBSF) (artigo 20º e seguintes);

Lei das Atividades e das Instituições Financeiras (LAIF) (artigo 20º e seguintes);

Aviso nº 1/2015, de 5 de março – Aprova o Modelo de Renúncia concernente às instituições de crédito de autorização restrita de que trata o artigo 6º, número 4, alínea a) da LAIF;

Aviso nº 3/2015, de 12 de maio – Fixa o capital social mínimo para as instituições financeiras;

Formulário de Registo de Instituições Financeiras, anexa à Circular 182/2015, de 13 de maio - PDF;

Formulário de Registo de Instituições Financeiras, anexa à Circular 182/2015, de 13 de maio - DOC.

Qualifying Holding

A qualifying holding is a direct or indirect holding in a financial institution that represents more than 5% of the share capital or voting rights or that allows a significant influence on management [Article 45 (2) of the LAIF].

A natural or legal person who, directly or indirectly, intends to hold a qualifying holding in a financial institution must notify Banco de Cabo Verde in advance.

The same applies if one wishes to directly or indirectly increase a qualifying holding, so that one’s percentage reaches or exceeds the thresholds of 10%, 20%, a third or 50% of the capital or rights in the institution, or when the latter becomes a subsidiary of the acquiring entity.

In turn, if a natural or legal person wishes to no longer hold a qualifying holding in a financial institution or to reduce it in such a way that the percentage of voting or capital rights held falls below any of the thresholds of 20%, a third or 50%, or in such a way that the institution ceases to be its subsidiary, it must inform Banco de Cabo Verde in advance, including the new amount of its share.

Banco de Cabo Verde has the exclusive power to make a decision to oppose or to not oppose the acquisition of a qualifying holding.

In general terms, the stages of the process are as follows:

1. Banco de Cabo Verde is notified of the intention to acquire or increase the qualified holding;

2. Banco de Cabo Verde assesses the proposed acquisition and makes a decision to oppose or to not oppose the acquisition based on its assessment of the proposed acquisition;

3. Banco de Cabo Verde notifies the proposed acquirer of its decision.

Banco de Cabo Verde may determine the inhibition of voting rights included in a qualifying holding, to the extent necessary and appropriate to prevent the influence on management that was obtained through an act that resulted in the acquisition or increase of said holding, whenever it has been acquired in breach of applicable legal rules, subject to the application of other sanctions (Article 48 of the LAIF).

Type of legal act: Opposition or non-opposition decision.

Competent authority: Banco de Cabo Verde.

Applicable legislation

Lei das Atividades e das Instituições Financeiras (LAIF) (Artigos 45.º e seguintes);

Aviso nº 5/2014, de 17 de outubro – Sobre aquisição de participação qualificada em instituição financeira.

Governing Bodies

Members of the management body and supervisory body of entities subject to Banco de Cabo Verde’s supervision, regardless of their corporate governance structure, are subject to a special, provisional or definitive registration with Banco de Cabo Verde in order to carry out their duties.

The special registration to carry out their duties applies to all members of the management body, even if they do not have executive duties, as well as to alternate members of the supervisory body.

Managers of branches and representative offices are also subject to a special registration.

Type of legal act: Refusal or acceptance.

Competent authority: Banco de Cabo Verde.

Applicable legislation:

Formulário_Registo Especial de Membros de Órgãos Sociais_15012020.docx

Key Functions

Financial institutions are responsible for establishing an organizational structure that embodies the requirements of good governance and includes functions that help to ensure proper, sound and prudent management.

In this context, it is worth highlighting the essential functions included in the governance system, notably the risk management function, the compliance function and the internal audit function, in addition to others that Banco de Cabo Verde deems pertinent.

Key position (function) holders are subject to a suitability assessment and consequent special registration with Banco de Cabo Verde.

Type of legal act: Denial or acceptance.

Competent authority: Banco de Cabo Verde.

Applicable legislation:

• Law on Financial Activities and Institutions (LAIF);

• Notice No. 4/2017, dated September 7 - Establishes the minimum requirements that a financial institution's internal control system must meet;

• Notice No. 1/2024, dated April 11 - Assessment of the Suitability and Registration of Key Functions.

Formulário Registo Especial de Titular de Funções-Chaves;

Questionário de avaliação da adequação do titular de função-chave.

Banking System Indicators

Quarterly publication of the compilation of the main financial and prudential banks indicators.

This information constitutes aggregated indicators of the Cabo Verdean banking system, on an individual basis, presented in an Excel file, regarding balance sheets, income statements and financial stability indicators.

Microprudential Supervision Policy

The policy aims to establish the general guidelines to be observed by microprudential supervision, being in line with the legal and regulatory framework in force, with the mission and values of Banco de Cabo Verde and with good international practices and recommendations.

Based on these guidelines, the aspects that make up the framework and that must be respected when carrying out microprudential supervision processes or activities will be established.