Cape Verde has four banks of systemic importance, which are required to maintain conservation reserves to mitigate impacts, according to an initial assessment by the Bank of Cape Verde (BCV). 

The regulator announced that Caixa Económica and Banco Comercial do Atlântico (BCA) are the two banks of "high systemic importance," in that order.

Following this were Banco Cabo-verdiano de Negócios (BCN) and Banco Interatlântico, owned by Portugal's Caixa Geral de Depósitos (CGD), both designated as banks of “slight systemic importance.” 

In contrast, Banco Angolano de Investimentos (BAI), International Investment Bank (IIB), and Ecobank were classified as “not systemically important.”

According to regulations published five months ago, the central bank releases the list of credit institutions classified as 'domestically systemically important banks' (D-SIBs) by May 31st each year.

Each bank's ranking is determined using data as of December 31 of the previous year and is based on four indicators: size (35%), interconnectivity (20%), substitutability (35%), and domestic sentiment (10%).

Caixa received a classification of 285 points, and BCA received 264 points, both surpassing the 200-point threshold that designates institutions as "domestic banks of high systemic importance."

Banks scoring between 150 and 200 points are considered to have "moderate systemic importance," but there are no institutions in this range. The next tier, ranging from 95 to 150 points, includes those classified as "domestic banks of slight systemic importance," which comprises BCN with 117 points and Interatlântico with 97 points.

Banks scoring below 95 points, such as BAI, IIB, and Ecobank, are deemed to lack systemic importance. 

To address this, the BCV, in line with global practices, has implemented a capital conservation buffer. This measure ensures that banks build up a robust capital base during economic growth, enabling them to absorb losses during periods of financial stress.

All domestic banks classified as Domestic Systemically Important Banks (D-SIBs) are required to establish a conservation reserve based on their classification. 

This measure gained global prominence following the 2007-2009 financial crisis to prevent issues in major institutions with substantial market influence, known as systemic importance.

Source: Expresso as Ilhas

BCV - Classification of domestic banks based on their systemic importance