Journal Issue

Chapter 1. Financial Systems in the WAEMU: Structure, Performance, and Risks

Patrick Imam, and Christina Kolerus
Published Date:
October 2013
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Overview of the Structure of the Financial System1

The financial system in the West African Economic and Monetary Union (WAEMU) remains largely bank-based. The banking sector comprises 106 banks and 13 financial institutions, which together hold more than 90 percent of the financial system’s assets (about 54 percent of GDP end-2011). Five banks account for 50 percent of banking assets (see Figure 1). The ownership structure of the sector is changing fast with the rapid rise of foreign-owned (pan-African) banks. This contributes to higher competition but also rising heterogeneity in the banking system, with large and profitable cross-country groups competing with often weaker country-based (and sometime government-owned) banks. Nonbank financial institutions are developing quickly, notably insurance companies, but remain overall small. More detailed analysis on the banking system is presented in the section entitled “The Banking Sector.”

Figure 1.WAEMU: Evolution of the Banking Sector

Source: Banking Commission of the WAEMU, Central Bank of West African States, and IMF staff calculations.

Note: WAEMU = West African Economic and Monetary Union.

Microfinance institutions (MFIs) represent a small but rising share of the financial system and contribute strongly to improving access to finance2 by lower-income households and small and medium-sized enterprises. The WAEMU has 759 registered MFIs. Sixty-one entities are classified as large institutions with assets or deposits above CFAF 2 billion and are supervised by the Banking Commission. These account for 90 percent of the MFI sector’s assets. Although significantly smaller than the banking system—MFIs’ total loans amount to about 8 percent of total bank credit—more people, particularly in rural areas, have accounts at MFIs than at banks, which helps raise overall access to the financial system from 5 to about 15 percent of the population. In countries such as Benin, Senegal, and Togo, MFIs have helped lift the overall access ratio to more than 20 percent of the population (see Benin and Senegal pilots3). Most MFIs are operated as mutuals or by civil society organizations and have a social mandate, such as lending to farmers in remote regions. Overall, the sector is profitable, but many of the smaller networks are loss-making and rely heavily on donor financing. More detailed analysis on MFIs is presented in the section entitled “Microfinance.”

The regional financial markets remain a marginal source of funding except for the governments. The regional stock market, based in Abidjan, has 37 quoted companies as of end-2012. Only 11 initial public offerings took place between 1998 and 2011. Its capitalization is small (about 12 percent of the WAEMU GDP in 2012). Companies listed are mostly in the financial and industrial sectors; Sonatel (a Senegalese telecom company) and Ecobank (a regional bank, headquartered in Togo) are the largest two companies, accounting for close to 50 percent of market capitalization. The debt market consists mostly of government paper and is small (about 10 percent of the WAEMU GDP in 2012). There is no significant secondary debt market, including for government paper. More detailed analysis on the regional financial markets is presented in the section entitled “Regional Markets.”

The Banking Sector

The banking sector has expanded in recent years. Bank credit to the economy has increased substantially in most countries since the mid-2000s (Figure 1). This trend continued in 2012, taking the ratio to GDP to about 20 percent, from 14 percent in 2010 (with an average credit growth rate of 6 percent annually). The number of bank branches and bank accounts also increased significantly in recent years. Credit is largely short-term and goes mostly to manufacturing and the service sector (particularly trade, hotels, and restaurants). Clients vary substantially across banks, with some dealing mostly with bigger firms (including subsidiaries of multinationals in the case of foreign-owned banks) and others are more focused on domestic retail clients. In some countries, increased competition from MFIs and new business strategies from entrants have led to diversification of the banks’ traditional customer base and higher competition. Most banks are significantly exposed to government securities and more generally to the public sectors.

An important recent development has been the emergence in the WAEMU of cross-border (pan-African) banking groups. This has often occurred through the purchase of domestic banks, in particular by Moroccan and Nigerian groups seeking to expand out of their home markets. Twenty large groups, accounting for most of the banking system, are involved in cross-border activities within the WAEMU (Figure 1). These groups, which are mostly incorporated as subsidiaries, are funded through local deposits. This funding model, coupled with their domestic orientation, explains why the direct impact of the global crisis was rather mild on these banks. European banks have remained engaged in the region, whereas pan-African banking groups have taken the opportunity to expand.

At this juncture, however, banking in the WAEMU is still conducted within national borders. Cross-border flows to households or corporations within the region are largely in the form of syndicated loans involving a sister bank located in the country of the client; in the recent period, Côte d’Ivoire and Senegal were net recipients of these flows, whereas most other countries were net exporters. The flows are still relatively small, at about 1.6 percent of total lending in 2012. Limited integration is also attested by large differences in lending and deposit rates for households and enterprises across countries. Limited banking integration reflects a number of factors, such as the still limited economic integration, but also the importance of local knowledge for lending activities. The main cross-border financial flows in the WAEMU involve bank purchases of government paper.

On average, the banking system is liquid and well capitalized, although the situation varies substantially across banks and countries (Box 1, Figure 2, and Table 1). As mentioned earlier, banks are very heterogeneous with regard to business models, size, geographical coverage, profitability, and vulnerabilities. Aggregate information hides this diversity and therefore needs to be complemented by a more granular approach. The analysis of financial soundness indicators (which are highly aggregated, available with long lags, and backward-looking; Table 2) and the results of the stress tests (which rely on bank-by-bank data) confirm the need for a dual approach. Both lending concentration, which is high in all countries of the region, and quality of assets, as reflected in high gross nonperforming loans, represent the main risks. Lack of data regrettably did not allow assessing risks related to the exposure of banks to WAEMU sovereigns, but this exposure is clearly increasing, raising new (possibly systemic) risks.4 The broader exposure of banks to the public sectors (e.g., through public enterprises) is even more substantial. The emergence of cross-border banking groups also brings new risks; for instance, cross-border banks may propagate foreign shocks into the domestic economy. Another potential risk arises when large banking groups have similar portfolios making them susceptible to similar shocks; in this case, although the diversification of the banking portfolio reduces the probability of an idiosyncratic failure, it increases the probability of a systemic crisis. Some of these banking groups are large enough to be considered domestic systemically important financial institutions.

Figure 2.WAEMU: Financial Soundness

Sources: Central Bank of West African States, IMF, African Department database, and Regional Economic Outlook database.

Note: The transformation ratio (stable resources/medium- and long-term loans) was lowered from 75 percent to 50 percent in early 2013; the data reported for 2012 takes the 50 percent into account.

Table 1.WAEMU: Financial System Structure, end-2011
Number ofTotal assetsDeposits outstandingLoans outstanding

as of


as of

Amount (bn CFAF)(% of


(bn CFAF)

(bn CFAF)
Private depository institutions
Microfinance institutions18803,179517501
Nondepository financial institutions14N/AN/AN/A
Public financial institutionsN/AN/AN/AN/A
Total financial system (excl. Central Bank of West African States)
Source: Central Bank of West African States.

Data for end-2010.

Source: Central Bank of West African States.

Data for end-2010.

Table 2.WAEMU: Financial Soundness Indicators 2005-12
(in percent, unless otherwise indicated)
Solvency ratios
Regulatory capital to risk-weighted assets9.178.366.759.7910.1611.0910.7210.99
Tier I capital to risk-weighted assets8.787.986.019.379.8010.5510.0810.59
Provisions to risk-weighted assets14.9814.1712.7512.2410.9612.0510.4012.49
Capital to total assets5.825.454.
Composition and quality of assets
Total loans to total assets63.4461.9159.0659.4157.5655.2755.1755.29
Gross NPLs to total loans19.9020.5018.9019.2017.2017.5815.9216.17
Provisioning rate66.8866.1765.7468.0561.4563.6864.2364.96
Net NPLs to total loans7.608.007.407.107.407.196.356.33
Net NPLs to capital82.7491.1790.8569.0068.5461.9954.0761.33
Earnings and profitability
Average cost of borrowed funds2.102.202.402.602.502.902.40
Average interest rate on loans9.708.809.9010.6010.1010.909.60
Average interest margin27.606.607.508.007.608.007.20
After-tax return on average assets1.111.19
After-tax return on average equity5.204.804.801.9014.8012.6313.67
Noninterest expenses/net banking57.9060.7562.6460.9163.7964.7561.63
Salaries and wages/net banking income26.5027.7527.5726.5027.0927.1126.37
Liquid assets to total assets41.7940.8938.1336.6433.9333.2733.5933.25
Liquid assets to total deposits55.1554.4150.9550.4346.0445.1246.0746.61
Total loans to total deposits83.7682.3878.8981.7678.4583.9784.2986.59
Total deposits to total liabilities75.7475.1574.8772.6673.3774.1272.9171.35
Sight deposits to total liabilities338.1737.8938.4136.9036.0736.6637.7936.72
Term deposits to total liabilities37.5737.2636.4535.7637.3037.4635.1134.63
Sources: Central Bank of West African States. Simple average.Note: Simple averages of country indicators. NPL = nonperforming loan.

The 2012 number is driven by Guinea Bissau where banks engaged in a very large loan to the hydrocarbon sector.

Excluding tax on bank operations.

Including saving accounts.

Sources: Central Bank of West African States. Simple average.Note: Simple averages of country indicators. NPL = nonperforming loan.

The 2012 number is driven by Guinea Bissau where banks engaged in a very large loan to the hydrocarbon sector.

Excluding tax on bank operations.

Including saving accounts.

Compliance with prudential norms remains low for a number of ratios. As shown in Figure 1, compliance varies across countries and across ratios. Also, there are banks in all countries breaching the capital adequacy ratio (lack of granular data did not permit scaling the compliance of prudential ratio by banks’ assets). Compliance improved in late 2012, but this reflected changes made to two ratios (the transformation ratio, which was lowered from 75 to 50 percent, and the ratio on portfolio structure, which was abolished). Progress over the last few years has been limited, which suggests a degree of regulatory forbearance. In addition, some of these norms are not in line with international standards. Low compliance is particularly problematic for ratios that are less demanding than international standards, such as the one on risk division (see ahead). As discussed in the last section, there are other important issues to address with regard to the supervision of regional groups and the crisis prevention and resolution frameworks.

Box 1.Banking System Soundness: Findings from the Stress Tests

In collaboration with the authorities, stress tests were performed on the banking systems of seven of the eight West African Economic and Monetary Union (WAEMU) countries. Data for Guinea Bissau were not available. The stress tests were based on end-2011 data; for two countries, granular data were available only for end-2010. The stress tests covered all banks—public, private, and foreign-owned—and tested for market risk, credit risk, and interest rate risk. Stress tests were not performed for exchange rate risks, given the credible peg to the euro, and for sovereign risks because of insufficient data. The lack of recent and comprehensive data is an important limitation to the use of stress tests for crisis prevention purposes. The tests performed did not incorporate macroeconomic feedbacks and other second-round effects, and assumed no policy response. The stress tests calibrated a series of large but plausible shocks, which comprised sectoral risks, including default by the largest individual borrower, interest rate spikes of 500 bps, and liquidity shocks—deposit runs with losses of 5 percent of deposits per day for 10 days.

The Results Illustrated some of the Known Strengths and Vulnerabilities of the System.

  • Limited interest rate risk. As the asset side of banks’ portfolio is typically short-term in nature—reducing maturity mismatches—and bonds are typically held until maturity, banks in most countries are resistant to large changes in interest rates.
  • Limited liquidity risk. With large liquidity buffers in most banks, only smaller ones face liquidity risks.
  • Severe sectoral/company concentration. The lack of economic diversification and the large informal sector lead banks to concentrate lending on only a few sectors and corporations. In the WAEMU, the 50 largest companies account for one-third of total bank credit. This is a major vulnerability for banks, and the risk can be systemic if banks are substantially exposed to the same large borrower (like ICS in Senegal a few years ago).
  • Weak asset quality. Although varying across banks, the generally weak quality of assets is reflected in large nonperforming loan (NPL) ratios (even after accounting for provisioning). Local accounting rules take longer to write off NPLs compared to most jurisdictions, with some of these NPLs likely to be old and potentially reflecting difficulties in exercising guarantees through the judicial system. Data on NPL flows were not available to assess recent trends.

Other Vulnerabilities, Known but not Explored in the Stress Tests, Include the Following:

  • Political instability. This risk is high in the region, as shown by the crises in Côte d’Ivoire, Mali, and Guinea-Bissau in the past two to three years.
  • Weather-related risks. Given the still important role of the agricultural sector in the economy, climate hazards (floods, droughts, etc.) subject the system to large, exogenous shocks.
  • Sovereign-bank relationship: WAEMU banks hold over 70 percent of public debt issued by WAEMU sovereigns, and cross-border holdings are sometimes large. In the case of Côte d’Ivoire in late 2010 (when the crisis started), more than half of the debt was held by residents of other WAEMU countries, generally banks. A default on this debt could have created a systemic bank crisis in the region.


Following a rapid expansion, the microfinance sector is consolidating in many countries. The quick expansion of microfinance networks in the early 2000s was welcome from the perspective of access to finance.5 However, it led to a proliferation of often small and unprofitable MFIs, which have partially operated out of the authorities’ control. Consolidation is ongoing in most countries both through mergers and acquisitions among MFIs and at the initiative of the authorities. Some countries are well advanced in the consolidation process—more than 100 institutions have been closed in Senegal—whereas others are still registering existing networks. A survey conducted in Benin in 2011, for example, revealed that 721 MFIs were operating then in the country but only 226 were licensed. Overall, the number of branches or points of service in the WAEMU has remained broadly constant since 2004. Outstanding credit, however, has increased significantly in most countries (Figure 3). Microfinance is particularly developed in Senegal (see Imam and Kolerus, 2013, for a more detailed description).

Figure 3.WAEMU: Microfinance

Sources: Central Bank of West African States and IMF staff estimates.

Notes: Country abbreviations are as follows: BEN = Benin; BFA = Burkina Faso; CIV = Côte d’Ivoire; GNB = Guinea-Bissau; MLI = Mali; NER = Niger; SEN = Senegal; TGO = Togo.

The authorities have started to address governance and profitability problems of the sector. The MFI sector is profitable overall, but the situation varies greatly depending on the size of the institutions, with the largest being the most profitable; NPLs are on an increasing trend, and governance problems are frequent due to a lack of accountability.6 A regulatory reform initiated in 2008—09 has led to a reorganization of supervisory responsibilities, with the larger institutions holding assets and/or deposits of more than CFAF 2 billion now supervised by the WAEMU Banking Commission. Smaller institutions remain supervised by national authorities, typically ministries of finance, and countries have started to build up their capacity in this area. Many MFIs report access to refinancing as a major issue given their relatively high transformation ratio, short-term resources (cash deposits), and an increasing demand for longer-term financing. Larger MFIs are able to get refinancing from banks, and these loans have recently become eligible for refinancing at the Central Bank of West African States (BCEAO); however, smaller MFIs cannot avail themselves of this option. The BCEAO is also considering how to include MFIs in the payment system as the current MFI license does not allow for money transfer. Mobile banking is just starting in the WAEMU (Box 2).

Regional Markets

Despite signs of development, interbank market activity remains limited. Interbank loans have amounted to less than 2 percent of total bank loans in the past five years. Loan maturity has tended to increase in recent years, and the slope of the implicit, yet imperfect, yield curve has become positive; it was virtually flat a decade ago. Moreover, the interbank rate has remained broadly within the policy rate corridor since 2009 (Figure 4). However, the interbank market does not yet perform a major role in the reallocation of liquidity. Despite excess reserves at the banking system level, the BCEAO still needs to inject massive amounts of liquidity to a large number of banks that cannot get this liquidity from the market. This phenomenon is another illustration that the banking system is highly heterogeneous and segmented. In the absence of collateralized operations, highly liquid banks—in general, though not exclusively the subsidiaries of large foreign banks, which also happen to be the more profitable ones—are reluctant to lend to others. As a result, most interbank loans take place within banking groups to avoid any counterparty risk. Because access to the BCEAO’s standing facility for liquidity provision is not yet fully electronic and therefore entails significant transaction costs, some operations on the interbank market still take place at rates greater than the higher policy rate of the BCEAO. These operations may also reflect implicit profit transfers between banks belonging to the same group.

Figure 4.WAEMU: Interbank Market

Sources: BCEAO, IMF staff calculations.

Note: BCEAO = Central Bank of West African States.

Box 2.Mobile Banking in the WAEMU

Mobile banking has not picked up significantly in the West African Economic and Monetary Union (WAEMU). Mobile banking in East Africa has greatly improved access to finance, in particular in remote rural areas. Whereas the number of mobile phone subscriptions in the WAEMU is comparable to that in East Africa—with Côte d’Ivoire and Senegal even outperforming Kenya—mobile banking services in the WAEMU have not followed a similar trajectory. Despite the regional consultation organized by the Central Bank of West African States (BCEAO) on mobile banking in 2011—after which the BCEAO created the legal framework and set up an action plan—there appears to be limited interest by the private sector in engaging this market. Only one bank has acquired a mobile banking license, and a second license is held by a telephone company. According to the BCEAO, microfinance institutions (which lack a license for money transfer) have not shown interest in participating in the distribution process either. This is a conundrum as this activity could be very profitable.

Figure B1.Mobile Cellular Subscriptions

(per 100 people)

Sources: International Telecommunication Union and World Bank estimates.

Note: Country abbreviations are as follows: CIV = Côte d’Ivoire; KEN = Kenya; SEN = Senegal.

Mobile banking costs are generally higher for clients in the WAEMU, and services are more limited. Although amounts below USD$10 can be transferred at lower costs in selected West African countries than in Kenya, costs are higher for transfers above USD$50. Fees diverge significantly for (relatively) large transfers: mobile banking clients in Senegal pay 10 times more than clients in Kenya (using M-Pesa) for a transfer equivalent to USD$200. The fee for withdrawing funds is much higher for larger amounts in the WAEMU. Interestingly, the payment schedule adopted by Orange Kenya is closer to M-Pesa’s than that of its West African sister companies. Also, whereas Kenya’s M-Pesa allows for sending money to outside its network (at a surcharge), this option is not offered in the WAEMU.

Kenya and WAEMU: Mobile Banking Fees, 2013
M-PesaOrangeOrange Senegal

(in USD)
Orange Côte

Transaction amount (USD)1
Withdrawal amount (USD)
Sources: Companies’ websites, IMF staff calculations.

Transaction to subscribed user of the same telecommunication company. Only M-Pesa and Orange Money Kenya allow for transfer to non-registered users at a surcharge.

Maximum amount of Orange Money Senegal.

Maximum amount of M-Pesa. The maximum amount of Orange Kenya is USD$1,140 and of Orange CIV USD$1,000.

Sources: Companies’ websites, IMF staff calculations.

Transaction to subscribed user of the same telecommunication company. Only M-Pesa and Orange Money Kenya allow for transfer to non-registered users at a surcharge.

Maximum amount of Orange Money Senegal.

Maximum amount of M-Pesa. The maximum amount of Orange Kenya is USD$1,140 and of Orange CIV USD$1,000.

The regional debt market has developed rapidly in the past years, mostly for government paper (Figure 5). Securities can be issued by private companies and governments on the regional stock exchange (referred to as BRVM, its French acronym). The BRVM has 46 bond lines, of which 28 are from private issuers and the rest from four sovereigns. Government bond issues represented 75 percent of all issuance by syndication in 2011, with Côte d’Ivoire and Senegal the most active issuers. The average interest rate on sovereign bonds was at 6.7 percent in 2011 (average duration 5.5 years), whereas the average interest rate on listed bonds issued by private corporations was 6.8 percent (at similar duration). Interest rates, however, do not provide a full account of differences in the cost of financing between the public and private sector. Private sector issuance required until recently a 100 percent guarantee by a certified institution (e.g., the West African Development Bank), which added the equivalent of 1—2 percentage points to issuance costs. Overall, the BRVM debt market remains small. Its total capitalization stood at about 2 percent of GDP at end-2012. It is not a significant source of financing for the private sector. There is no significant secondary market. Most government debt, however, is still issued to banks through auctions organized by the BCEAO. This segment has been very dynamic in recent years, and outstanding government debt issued on this market is about 10 times larger than that issued at the BRVM. Debt issued this way is mostly in the form of Treasury bills; it has a relatively short average maturity and can be used for refinancing at the BCEAO. There is no significant secondary market for this type of government debt.

Figure 5.WAEMU: Debt Markets

Sources: BCEAO, BRVM, IMF staff calculations.

Note: BCEAO = Central Bank of West African States; BRVM = Bourse Régionale des Valeurs Mobilières; WAEMU = West African Economic and Monetary Union.

The regional equity market remains shallow (Figure 6). Launched in 1998, the BRVM started off with 36 listed companies carried over from the previous stock exchange in Abidjan. The number of companies listed has remained broadly stable, with 37 in early 2013, as new listings broadly offset the number of companies taken off the list. Market capitalization increased from 4.3 percent of GDP in 2002 to 10.1 percent of GDP in 2012. Foreign investors are allowed in, and their stakes in Sonatel and ETI (Ecobank) are reportedly fairly large. The average market return in 2011 was 8.6 percent in local currency, and 27 companies paid dividends. BRVM is supervised by the regional council for public savings and financial markets (referred to as CREPMF, its French acronym).

Figure 6.WAEMU: The BRVM-Stock Market

Sources: BRVM, CREPMF.

Note: BRVM = Bourse Régionale des Valeurs Mobilières. Country abbreviations are as follows: BEN = Benin; BFA = Burkina Faso; CIV = Côte d’Ivoire; GNB = Guinea-Bissau; MLI = Mali; NER = Niger; SEN = Senegal; TGO = Togo.

Systemic Risk and Surveillance of the Financial System

Systemic risk is defined as any threat of disruption to financial services that is caused by an impairment of all or parts of the financial system and that has the potential to have serious negative consequences for the real economy. It is a form of negative externality that occurs when a bank failure, market seizure, or breakdown of the infrastructure can have serious adverse implications for market participants. Systemic risk can be decomposed into time-series and cross-sectional risk. In the time-series dimension, the buildup of risk over time interacts with the macroeconomic cycle. Financial institutions and borrowers may take on excessive amounts of leverage in the upswing of an economic cycle only to become overly risk-averse in a downswing. This amplifies the boom and bust cycle in the supply of credit and liquidity—and by extension in asset prices—which can be damaging to the real economy. In the cross-sectional dimension, the growing size and complexity of the financial system are raising interconnectedness and common exposures that may increase contagion when problems arise. As a result, the failure of one institution—particularly, one of significant size or with strong interconnections—can threaten the system as a whole.

The Senegal pilot suggests that time-series systemic risk might be limited at this juncture in the WAEMU, though some cross-section risks are present. No sector seems highly leveraged in Senegal. Banks tend to finance mostly prime borrowers with short-term credit such as trade finance, implying that risks to the financial system, besides those from exogenous shocks, are likely to be low, except for concentration risk. Capital inflows and outflows are limited. Many of these features likely apply to other WAEMU countries.

However, some systemic linkages are evolving rapidly that could change this assessment in the near future:

  • Cross-sector linkages—those that exist between the financial and nonfinancial sectors—are on the rise as banks are increasingly lending to sovereigns through the regional market.
  • Cross-border linkages—those between the financial system of the WAEMU and the world economy, but also those within the WAEMU—are intensifying as large WAEMU banks and foreign banks, especially from Morocco and Nigeria, seek opportunities within the WAEMU and the region.
  • Cross-institution linkages—those that exist between bank and nonbank financial institutions. The Senegal pilot showed the increasing linkages between banks and insurance companies and MFIs, whether through equity ownership, debt holdings, or deposits.

Financial stability in the WAEMU also faces particular challenges. In a heterogeneous monetary union, business cycle synchronization is limited, as is the case in the WAEMU. In such circumstances, monetary policy may not necessarily act as a stabilizing force to all the national financial systems, as a focus on average regional inflation might imply that monetary policy is too accommodative in some parts of the union that have high inflation levels and too tight in others that have low inflation levels. Limited financial development also means that the scope for countercyclical fiscal policy is reduced, as it may be difficult to issue large amounts of government paper in a shallow market during a downturn (see Imam and Koleras, 2013), although such policy should play a critical role in absorbing asymmetric shocks (and even symmetric ones given the limited effectiveness of monetary policy). With limited shock absorption mechanisms, a robust financial crisis prevention and resolution framework is even more critical.

As indicated in the case of Senegal (Imam and Koleras, 2013), there is in principle a clear division of labor between national and regional authorities on the supervision of the financial system. The banking sector and MFIs with more than CFAF 2 billion in deposits or loans are supervised by the WAEMU Banking Commission. Smaller MFIs are supervised by national authorities. The regional financial market is under the supervision of CREPMF. Ministries of Finance, together with the regional regulator (CIMA), supervise the insurance sector. Finally, the Financial Stability Committee is responsible for macroprudential supervision and to guarantee the stability of the overall financial system at the regional level. As banking licenses are provided by the BCEAO—after a qualified opinion is issued by the WAEMU Banking Commission—following request from the national governments, there is an understanding that banks and subsidiaries that are in trouble will have to be supported by the governments of the countries in which they are located, and not of the country of the parent company.

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