Luanda - Angolan banks are appealing to the government to
help put together a bailout package to protect account holders as lenders
reel from low oil prices that make up almost all of the nation’s
foreign-exchange earnings.
Financial assistance could come from the administration
of President Jose Eduardo dos Santos or be shared by all of the southwest
African country’s 28 operational lenders, Amilcar Silva, chairman of the
Association of Angolan Banks, said in an interview in the capital, Luanda. He
didn’t specify whether lenders were calling for a liquidity boost for the
industry or cash injections aimed at struggling companies.
“Banks must be helped because they have liquidity
problems that can cause negative situations in the whole system, putting its
credibility at stake,” Silva said. "What we need to do is look at the
matter in-depth and then decide the best way,” he said, adding that any
agreements between the industry and financial authorities would have to cover
the future viability of banks, and “if they have to return the money and when.”
The Angolan economy, sub-Saharan Africa’s third-largest,
has been crippled by oil prices that have halved since mid-2014, with the
International Monetary Fund estimating zero growth for 2016. Those woes have
knocked the banking industry, causing bad debts to soar and business to slow as
the government cuts spending. Dollar supplies have also dried up as foreign
banks pulled out of supplying greenbacks to the country that Transparency
International ranks among the world’s 20 most corrupt because of poor compliance
with anti-money laundering and corruption rules.
Improve compliance
Troubled loans more than tripled to 15 percent of total
credit in September when compared with levels in 2010, and were at their
highest as a proportion of regulatory capital requirements since 2014,
according to data compiled by the country’s central bank and consultancy
Eaglestone Advisory SA, which has offices in Johannesburg, Lisbon and Luanda.
Foreign exchange fell to about a third of bank deposits from more than half in
2012, the data show.
Read also: Angola slashes growth forecast
Some of the country’s smaller lenders have been hit
particularly hard, said Silva, whose group represents 24 of the country’s
banks. Most of the industry’s profit in 2016 was split between foreign-exchange
transactions and loans, he said. The association has set up a group of experts
to improve member compliance with international rules and best practices, he
said.
A spokeswoman at Angola’s central bank didn’t answer
calls to her mobile phone or respond to e-mailed and text-message requests for comment.
Stress test
Revenue at the country’s banks might be “slightly” higher
in 2016, Silva said, after the central bank raised the benchmark interest rate
three times last year to a record 16 percent. While the industry’s return on
equity is growing, it is still less than half of the 32 percent earned in 2010,
according to the central bank and Eaglestone.
The central bank’s 2015 financial stability report showed
almost half of the country’s banks would fail a stress test of holding 10
percent capital reserves if their loan book was lowered by two notches out of
the seven risk levels, according to a January 13 report in Luanda-based
Expansao newspaper. The risk adjustment would also cut the industry’s 141.3
billion kwanzas ($848 million) net profit that year to a loss of 413.7 billion
kwanzas and reduce the solvency ratio to 11.7 percent from 19.8 percent, the
newspaper said.
Three of the banks wouldn’t meet liquidity requirements
if clients withdrew half of their deposits, according to Expansao.