More banks set to close this year, says economist

Governor José de Lima Massano announced that the quality of the assets of the commercial banks operating in Angola will begin to be evaluated by the National Bank of Angola (BNA)

The large volume of non-performing loans in Angola"s financial system, at almost 30% of the total, "may become unsustainable" and more banks are set to close this year, according to the chief economist of consultancy firm Eaglestone.

"I think it will," replied Tiago Dionísio when asked by Lusa about the possibility that Angola"s central bank might order the closure of more banks during the year. He pointed out that the issue of credit quality is among issues addressed in the deal signed with the International Monetary Fund.

In an interview with Lusa about the Angolan banking sector, in which three banks have been closed in just the past month, Dionísio said that "the process of reviewing the credit portfolio by the IMF begins in April, and after that review we may have more bad news in the sense that banks have to improve, that is, resolve the credit issue."

According the Eaglestone economist, "a level of 28% of non-performing loans, at the end of December, is a level that could become unsustainable, but it should be stressed that more than 80% of this amount is held by [state bank] BPC, and it is a subject that the BNA is very committed to trying to solve, but it is not a short-term process."

Since the beginning of the year, the National Bank of Angola (BNA) has already ordered the closure of three banks: Banco Angolano de Negócios e Comércio (BANC), this week, following Banco Mais and Banco Postal at the start of the year. The latest closure was justified by "insufficient shareholder capital", it said.