(Ecofin Agency) – While the outstanding amount of non-performing loans was up at the end of May compared to April 2022 in Morocco, the project to create a secondary market for non-performing loans is once more mentioned, this time in the 2021 annual report of the Professional Association of Finance Companies.
The Central Bank of Morocco, also called Bank Al-Maghrib, plans to create a secondary market for non-performing loans. It will aim “to assess doubtful debts as closely as possible to their market value so that they can be sold in order to free up the financial capacity of credit institutions”, learned theEcofin Agency.
This ongoing project is supported by the regulator of the Moroccan banking system and the International Finance Corporation (IFC), indicates the recent annual report of the Professional Association of Finance Companies (APSF). These two institutions organised, at the beginning of December 2021, and as part of the preparatory work linked to the creation of this market, a round table on the recovery of bank debts. During this exchange, several debt collection practices were presented and exposed.
Also in December 2021, Abdellatif Jouahri (photo), Governor of the Central Bank of Morocco, signified in the columns of the Moroccan weekly Finance News Hebdo that this secondary bad debt market is expected during this year 2022.
“We worked on the tax, legal and recovery plans. We have also worked with banks to prepare for the assessment of the stock of receivables […] We will make up for lost time and be able, during this year, to close this secondary market for bad debts”he explained.
This exit by the Governor of the Central Bank of Morocco followed that of the International Monetary Fund (IMF) which, during this same period of December 2021, had put back on the table this project for the creation in Morocco of a secondary market for outstanding debts.
“The Central Bank of Morocco will have to continue to ensure that banks continue to build provisions for bad debts, while accelerating, with the authorities concerned, the launch of reforms for the creation of a secondary market for bad debts” , indicated the institution of Bretton Woods.
Two years earlier, in September 2019, Bank Al-Maghrib had already indicated its desire to tackle non-performing loans. “We are looking at the subject of creating a secondary market for bad debts, which would make it possible to rely on specialized collection players. The latter, with their techniques, their management, their own management methods will make it possible to improve the recoverability of these portfolios and free up capital for the banks”, declared in this period Hiba Zahoui, director of banking supervision at the Central Bank of Morocco. This solution, she continues, will depend on “investors’ appetite for this type of paper and the portfolios that they will analyze and on which they will do due diligence”.
It should be noted that this secondary market for non-performing loans will, among other things, lighten banks’ balance sheets, insofar as these non-performing loans weigh on the profitability of banking establishments and hinder their ability to further finance the economy.
In its latest banking statistics for May 2022, the Central Bank of Morocco reports that the stock of non-performing loans reached 87.4 billion dirhams (8.6 billion dollars), up from the April level. 2022, i.e. 86 billion dirhams.
Chamberline MOKO
