Angolan banks call for bail-out package

Angolan banks are appealing to the government to help put together a bail-out package to protect account holders as lenders reel from the effects of low oil prices.

Financial assistance could come from the administration of President Jose Eduardo dos Santos or be shared by the country’s 28 operational lenders, Amilcar Silva, chairman of the Association of Angolan Banks, said in Luanda. He did not specify whether lenders were calling for a liquidity boost to improve the industry’s ability to convert short-term assets into cash or capital injections aimed at struggling banks.

“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”.

His group represents 24 of the country’s banks.

The economy has been crippled by low oil prices, which have knocked the banking industry, causing bad debts to soar and business to slow.

POOR COMPLIANCE

Dollar supplies have dried up as foreign banks pulled out of supplying the US currency to a country that has poor compliance with anticorruption and anti-money-laundering rules.

Troubled loans more than tripled to 15% of total credit in September 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 central bank and consultancy Eaglestone Advisory, which has offices in Johannesburg, Lisbon and Luanda. Foreign exchange fell to about a third of bank deposits from more than half in 2012.

Most of the industry’s profit in 2016 was split between foreign exchange transactions and loans, Silva said.