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Thresholds in the WAEMU Zone: A Look at Basel III Requirements

In the West African Economic and Monetary Union (WAEMU) zone, banks have had to meet a minimum capital level of 8.625% of their risk-weighted assets since the end of 2018. This threshold is set by Decision No. 003 of March 30, 2015, which also establishes the minimum share capital for credit institutions in the region.

According to Article 36 of the Banking Law, banks and financial institutions must maintain equity capital at a level equal to or greater than the minimum capital determined under Article 34. This ensures that these institutions have sufficient capital to meet their obligations and continue operating in the event of financial difficulties.

Insolvency, Recovery, and Resolution: The OHADA Uniform Act

In Senegal, the legal and regulatory framework governing insolvency, recovery, and resolution is governed by the OHADA Uniform Act on the Organization of Collective Procedures. This act provides for three procedures to deal with companies in difficulty:

• Preventive settlement aims to avoid insolvency or closure of business and enable the discharge of a company’s liabilities through a preventive composition agreement.
• Judicial recovery and liquidation of assets are designed to safeguard the company and pay off its liabilities.

Basel III Requirements: A Look at Implementation in Senegal

Senegalese law provides for collective procedures that may be imposed on creditors of a company in difficulty. In the event of the liquidation of a credit institution, bank account holders will be reimbursed immediately after creditors of legal costs and super-privileged wages have been paid.

While there are no specific banking regulatory requirements related to environmental, social, and governance (ESG) matters under Senegalese law, credit institutions are encouraged to implement international ESG standards. These standards promote good corporate governance practices, social responsibility, and environmental sustainability.

Conclusion

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The threshold defined by Basel III requires banks in the WAEMU zone to maintain a minimum capital level of 8.625% of their risk-weighted assets. Senegalese law provides for various procedures to deal with companies in difficulty, including preventive settlement, judicial recovery, and liquidation of assets. While there are no specific ESG requirements under Senegalese law, credit institutions are encouraged to implement international ESG standards to promote good corporate governance practices and social responsibility.