Banks in Angola calls for public help to overcome lack of liquidity

24 January 2017

Banks in Angola have requested government support for the creation of a bailout fund that protects depositors from the lack of liquidity of the financial system caused by the fall in oil prices in recent years, said the chairman of the Angolan Banks Association.

Amílcar Silva also told financial news agency Bloomberg that banks should be helped because they have liquidity problems that can cause negative situations throughout the system, calling into question their credibility.

Financial aid may come directly from the public purse or on a sharing basis between all 28 banks operating in Angola, said the chairman of the Angolan Banks Association.

Silva, the leader of an Association representing 24 financial institutions in the country, did not specify whether the aid to banks would be provided through cash injections, which would improve conversion of short-term assets into cash or direct injection of capital in more problematic banks.

The fall in oil prices, Angola’s main export, led to an economic and financial crisis, with bad debt more than tripling to 15% of loans at the end of September 2016 compared to the levels recorded in 2010.

Silva also said that the smaller banks were particularly affected by the crisis, adding that revenues should be improved “slightly” in 2016, after the central bank raised interest rates on three occasions in the past year to a record high of 16%. (macauhub)