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Cabo Verde’s Financial Sector: Regulatory Framework and Oversight

In a bid to ensure stability and integrity in Cabo Verde’s financial sector, the country has put in place a comprehensive regulatory framework that governs various financial activities. In this article, we will delve into some of the key aspects of this framework, including licensing requirements for financial institutions, registration of governing bodies, qualifying holdings, and banking system indicators.

Licensing Requirements

To operate in Cabo Verde’s financial sector, entities must obtain a license from Banco de Cabo Verde (BCV), the country’s central bank. The BCV has exclusive powers to grant licenses, which are subject to specific requirements outlined in the Lei das Atividades e das Instituições Financeiras (LAIF). Some of the activities that require licensing include:

• Acting in interbank markets
• Leasing movable property
• Consulting services

Registration of Governing Bodies

Members of the management body and supervisory body of entities under BCV’s supervision must undergo a special registration process to carry out their duties. This applies to all members of the management body, including those without executive duties, as well as alternate members of the supervisory body. Managers of branches and representative offices are also required to register.

Qualifying Holdings

A qualifying holding refers to a direct or indirect stake in a financial institution that represents more than 5% of the share capital or voting rights or allows significant influence on management. Natural or legal persons seeking to acquire or increase such holdings must notify BCV in advance. The central bank has the power to oppose or not oppose acquisitions based on its assessment of the proposed acquisition.

Banking System Indicators

BCV publishes quarterly reports on the main financial and prudential indicators of credit institutions with general authorization (commercial banks). This aggregated data provides insight into the Cabo Verdean banking system’s performance, including:

• Balance sheets
• Income statements
• Financial stability indicators

Microprudential Supervision Policy

The microprudental supervision policy aims to establish guidelines for BCV’s oversight of individual financial institutions. The policy is based on good international practices and recommendations, as well as the country’s legal and regulatory framework.

In conclusion, Cabo Verde’s financial sector is governed by a robust regulatory framework that ensures stability and integrity. The licensing requirements, registration of governing bodies, qualifying holdings, banking system indicators, and microprudential supervision policy all contribute to maintaining a healthy financial ecosystem in the country.