Banking & Finance 2023

Last Updated October 12, 2023

Morocco

Law and Practice

Authors



Gauvin & Raji Avocats specialises in the banking and financial sector, with offices in Paris and Casablanca. The firm helps to prepare and draft legal and regulatory reforms and advises its public and private clients, in connection with banking and financial regulation, the structuring of innovative financial instruments, and the creation of financial institutions and sovereign or private investment funds, as well as financial and insurance risk transfer vehicles. Gauvin & Raji Avocats maintains close working relationships with the governments of the countries in which it operates, as well as with professional associations. It assists its clients with the implementation of their projects in several European countries as well as in Africa. The firm’s goal is to foster relations between the European Union and the African Union. It also assists and represents its clients in other regions of the world where the development of their activities is complicated by various risks, including geopolitical risks.

The recent surge in raw material prices and supply difficulties are having serious repercussions on the economy and disrupting the daily lives of households and businesses. Several companies are facing cash flow tensions, under the effect of an economic crisis which, following COVID, has been prolonged by the war in Ukraine and accentuated by the expiry of cash credits guaranteed by the State at the start of the year, in addition to an extension of payment deadlines.

In addition, companies must face another challenge: the drought observed in Morocco, with recent precipitation estimated at only 13% of the typical annual average and dam levels at below a third of their capacity, which is compromising the 2021-2022 agricultural campaign and poses a serious risk of rural exodus similar to that which was experienced in the 1980s.

Faced with this, the government has renewed its support for businesses through a system implemented by banks. In practical terms, this system consists of the following measures:

  • Tamwilcom, a state-backed financing initiative for Moroccan businesses, has increased its guarantee commitment ceiling from MAD10 million per operation and MAD20 million for the same company (Damane Atassyir and Damane Istitmar) to MAD15 million and MAD30 million respectively, in order for companies to cover financing of up to MAD50 million compared to MAD33 million previously; and
  • new debt rescheduling operations, up to three years including a deferral of up to one year to ease pressure on cash flow, are available to companies, and after agreement from the creditor bank, to companies not in a situation of safeguarding, recovery or judicial liquidation. The same extension period must be applied to other medium and long-term loans granted by the bank. In return for this aid, companies undertake not to distribute dividends nor to remunerate or reimburse the current accounts of partners during the deferral period for rescheduled credits.

Furthermore, in response to the exceptional rise in inflation in 2022, the Moroccan central bank, Bank Al-Maghrib (BAM), raised its key rate twice, in September and December, by 100 basis points in total, while maintaining all other support measures put in place in 2020 in response to the COVID-19 crisis.

However, interest rates did not experience significant variations, with the exception of those matching Treasury issues. At the same time, bank credit to the non-financial sector recorded an increase of 7.9%, mainly reflecting the increase in cash flow needs of private companies.

Monetary conditions were also marked by an annual average depreciation of the real effective exchange rate of 4%.

On 3 April 2023, the International Monetary Fund (IMF) approved a two-year agreement in favour of Morocco under the Flexible Credit Line (ligne de crédit modulable, or LCM), designed for crisis prevention, amounting to approximately USD5 billion. The IMF considered that Morocco met the conditions required to benefit from this LCM due to its solid economic policies, institutional frameworks and economic fundamentals, as well as its commitment to maintaining these policies in the future.

However, the Moroccan economy remains vulnerable to a deterioration in the global economic and financial environment, increased volatility in commodity prices and recurrent droughts. In this context, the LCM agreement will strengthen Morocco’s external reserves and provide the country with additional insurance against extreme risks.

Please refer to 1.1 The Regulatory Environment and Economic Background.

The Moroccan corporate bond market features a wide range of opportunities for investors, mainly with the banking and financial sector, commodities and infrastructure companies, food and beverage manufacturers and industrials as issuers. The Moroccan banking sector includes both state-owned banks (eg, CDG Group) and private banks (eg, Attijariwafa bank, Bank of Africa, CFG Bank, etc). It should be noted that foreign banks are still present in Morocco (eg, Société Générale and BNP Paribas) even though the trend of moving away from Africa seems to be growing: for example, Crédit Agricole recently sold its Moroccan banking subsidiary (Crédit du Maroc) to a large Moroccan private conglomerate; this, after having sold its African banking subsidiaries to the Moroccan banking leader, Attijariwafa bank, some 15 years ago.

The financials of Moroccan corporate and banking bonds seem to be reliable in terms of credit fundamentals partly thanks to the careful supervision conducted by BAM and the Moroccan capital markets authority, the Autorité Marocaine du Marché des Capitaux (AMMC). BAM and the foreign exchange office, the Office des Changes, have elaborated and implemented strict capital requirements and controls on the exposure of Moroccan banks to foreign exchange for the purpose of establishing a certain level of control over potential risks. Moreover, Moroccan banks and companies tend to be conservative, avoiding anything that is likely to negatively impact the health of their balance sheets, which can be seen in the relatively low rates of average leverage. This quite low leverage ratio may translate into a potential for investment choices with appealing risk/return characteristics.

Almost the total amount of credit extended to Moroccan borrowers was made available by banks, including international financial institutions (IFIs). It is worth mentioning that the Kingdom of Morocco has been for a long time and is still the first “client” of most of these IFIs, notably the African Development Bank (AfDB) and the Agence Française de Développement (AFD). Some of the total credit extended to Moroccan borrowers was made available by financial leasing companies, factoring companies and financing companies in the market.

Hence, banks remain dominant in the credit sector, even though factoring, financial leasing and financing companies and funds are strengthening their position and alternatives to banks are trying to emerge.

Ways in which banking and finance techniques are evolving include:

Facilitating the use of financing by the capital market

The AMMC has contributed to the establishment of a modern, flexible and evolving legislative and regulatory framework likely to encourage the financing of companies by the market, thanks to:

Promoting the creation and implementation of innovative products

To support innovation, the AMMC carried out several actions in 2022 and 2023 to enhance the range of financial instruments available on the market, in particular:

  • finalising the regulatory mechanism governing collaborative financing;
  • expanding the Sharia-compliant finance (finance participative) offering, through the adoption of decrees relating to investment and financing Sukuk certificates and the presentation to the Supreme Council of the Ulemas of a Sharia-compliant stock market index project; and
  • supporting the development of fintech by adopting a multidimensional approach through:
    1. launching a proof of concept using blockchain technology in close collaboration with certain market players and relating to a bond issue by private placement, thus representing the first bond issue launched in Morocco on a blockchain platform;
    2. implementing the legislative framework for crypto-assets by overseeing a national working group on crypto-assets (GTNCA); and
    3. launching a fintech portal on the AMMC website to allow project leaders to discuss their projects and the legal and regulatory framework applicable to them with the AMMC.

Environmental, social, corporate and governance (ESG) issues are on the agenda of the Moroccan government and authorities such as the AMMC and BAM.

Sustainable finance

Over the years, Morocco has been undertaking a remarkable sustainability strategy, focusing particularly on renewables, in accordance with the ever-increasing energy demand of the country. Since the early 2000s, Morocco has invested massively, with the support of IFIs, in renewable energy projects, and the renewable energy capacity in the country has enjoyed a tremendous increase.

Furthermore, BAM has mobilised, alongside ministerial authorities, to achieve the nationally determined contributions under the Paris Agreement by establishing a favourable and incentive regulatory framework and is working with the authorities concerned to define the national Net Zero carbon strategy by 2050.

From the international standpoint, BAM has contributed to the work of the central banks involved in the Network for Greening the Financial System (www.ngfs.net/en), the Sustainable Banking and Finance Network (www.sbfnetwork.org) and the Alliance for Financial Inclusion (www.afi-global.org) in the field of green and sustainable finance.

The AMMC continued its commitment to the development of sustainable finance through a series of actions aimed at promoting the integration of sustainability aspects into the practices of market players, both issuers and market participants. Similarly, the AMMC has signed partnership agreements (FSD Africa, IFC – fsdafrica.org/partner-organisation/ifc), carried out awareness-raising actions on ESG aspects and deployed a tool to assess the compliance and quality of ESG reports. In addition, the AMMC and the Casablanca Stock Exchange organised a meeting of the signatories of the Marrakech Pledge launched at COP22. This meeting was an opportunity to reflect upon the achievements of this initiative, to deliberate on a new action plan and to welcome six new signatories (three stock exchanges and three capital market authorities).

Customer protection

BAM continued work aimed at strengthening transparency and the public’s right to information, improving access to banking products and services, stimulating competition for the benefit of users and developing the complaints management system. In this context, BAM has issued texts on information for credit applicants and account closure. In connection with the processing of complaints, it continued its policy of promoting the Moroccan Centre for Banking Mediation (cmmb.ma/en), notably through its support in the context of targeted communication actions and encouraging users of banking services to use its services for the amicable settlement of disputes.

Supporting women

BAM has always been aware of the obstacles encountered by rural women, who remain among the most vulnerable segments of the population in terms of financial inclusion. For this reason, BAM worked to mobilise public and private actors for the development of a national road map in favour of their economic empowerment. To this end, a support mission has been carried out, with the support of the European Bank for Reconstruction and Development (EBRD), with the aim of assisting in the furtherance of this vast project.

The so-called “banking monopoly” is a principle of Moroccan law that prohibits any entity from carrying out credit operations on a regular basis other than those expressly authorised to do so. Entities that carry out credit activities on a regular basis must be either a licensed credit institution (établissement de credit) or a financing entity (société de financement). Before carrying out their credit activities in Morocco, those entities must be licensed by the Wali (governor) of BAM and comply with the relevant prerequisites and conditions.

Moroccan laws provide, however, for some exceptions to the banking monopoly, amongst which are:

  • loans granted by individuals to enterprises via crowdfunding platforms;
  • commercial loans between enterprises that have an economic relationship;
  • intragroup loans; and
  • securitisation vehicles (organismes de titrisation).

Foreign lenders are subject to the Moroccan rules on banking monopoly except for international financial institutions and foreign public co-operation bodies authorised under an agreement entered into with Morocco to grant loans to Moroccan entities.

Besides, foreign lenders are subject to the Moroccan foreign exchange regulations, mainly the Instruction Générale des Opérations de Change (IGOC), which lays down certain conditions in terms of purpose of financing.

In practice, foreign lenders are commonly involved in granting syndicated loans to Moroccan corporates, many of which go towards the funding of infrastructure projects.

The granting of securities to foreign lenders is subject to the Moroccan foreign exchange regulations. Moroccan banks are allowed to grant securities to foreign lenders to cover commitments to the latter, under the conditions set out in the IGOC. The IGOC also refers to margin calls and cash deposits provided as collateral under commodity derivatives.

Finally, Moroccan insolvency laws may restrict the possibilities of providing security.

Morocco is subject to foreign exchange controls and regulation. Foreign investors are allowed, following the completion of some formalities, to freely transfer abroad the whole proceeds of their investments in Morocco provided that the initial investment is carried in one of the foreign currencies listed by BAM. Furthermore, payments abroad of principal, interest, fees and commissions due under eligible loans are authorised.

However, some specific transfers of funds into and out of Morocco are subject to prior authorisations from the Office des Changes.

There are no specific statutory restrictions on a Moroccan borrower’s use of proceeds from loans or debt securities under Moroccan laws. Parties do, however, generally agree contractually on the permitted use of funds.

The concept of agent is largely used in Morocco in the course of syndicated loans. It is generally based on a power of attorney granted by the lenders to a bank institution acting as agent, based on the agency provisions included in the Dahir (9 Ramadan 1331) formant Code des Obligations et des Contrats (BO 12 Septembre 1913) (DOC) and Commercial Code (Loi No. 15-95 formant code de commerce). Creditors are expressly authorised by the DOC to appoint a pledge agent to manage their securities on their behalf, from their creation to their enforcement.

There is no concept of a trust under Moroccan laws.

Transfer of monetary claims (créances) under a facility agreement subject to Moroccan laws can be made by way of an assignment (cession) that might be subject to:

  • the DOC, which requires a notification to the borrower by bailiff or the borrower’s consent in case of litigious claims;
  • the Commercial Code, which allows assignment to banks licensed by the Wali of BAM; or
  • Securitisation Law No. 33-06 as subsequently amended and completed by Laws No. 119-12, 05-14 and 69-17.

The assignment agreement is executed between the existing lender and the new lender without the necessity of having the borrower as a party. Notification to the borrower, however, is required to make the assignment effective towards the borrower.

The transfer of security packages may require the authorising entity to grant the respective collateral, as well as the conduct of additional formalities, such as filings with regulatory and registration authorities (L’Agence Nationale de la Conservation Foncière, Registre National Electronique des Sûretés Mobilières, etc).

There are no specific restrictions on debt buy-back by the borrower under Moroccan laws.

The Moroccan legal framework regarding takeover bids is provided in Loi No. 26-03 relative aux offres publiques sur le marché boursier, Loi No. 17-95 relative aux sociétés anonymes and the Règlement Général de la Bourse de Casablanca. Takeover bids are governed by the rules of equality between shareholders and free competition. There are no rules regarding “certain funds” with respect to public acquisition finance transactions. Under Moroccan law, in public acquisition finance, the bidder in a takeover bid is required to guarantee to the holders of the shares of the targeted company that it will fully pay their purchase price.

Two legal developments deserve to be pointed out:

  • Due to the effect of COVID, parties are inclined to amend the clause governing force majeure with a view to, depending on the respective parties’ standpoints, capturing or excluding events like the COVID pandemic.
  • Before 28 July 2022, the text setting out the list of regulated assets that insurance companies can hold in representation of their technical reserves – namely, article 27 of the Order of the Minister of Finance and Privatisation No. 1548-05 of 10 October 2005 relating to insurance and reinsurance companies, modified by Order No. 3120-10 of 16 November 2010 – did not in any way contemplate securities governed under foreign law. Since then, the doubt has been removed insofar as article 38 of Circular No. 01/AS/19 of 2 January 2019 has been amended by Circular No. AS/01/21 of 16 March 2021, published (only in Arabic) on 28 July 2022. Consequently, legal advice opining on the capacity of insurance companies to subscribe to foreign rights securities must be reviewed, and the contracts between banks and insurers intended to market such securities to the latter may be amended.

Banking Law No. 103-12 as amended in 2021 allows the Minister of Finance to fix the maximum amount of interest that may be charged by banks and financial institutions. The maximum amount fixed for the period from 1 April 2023 to 31 March 2024 is 12.94%.

There are no rules or laws regarding disclosure of certain financial contracts.

Payment of the principal is not subject to taxation.

Interest payments paid overseas to entities that are non-resident lenders are subject to withholding tax at a rate of 10%, subject to any double taxation treaty which may provide for a lower withholding tax rate or an exemption from tax.

There should be no obligation on the payor to withhold tax at source upon the payment of interest to a foreign lender if:

  • the loan is a granted by a foreign lender to the Moroccan State or is guaranteed by the latter;
  • the loan is granted by the Banque Européenne d’Investissement for projects approved by the Moroccan Government;
  • the loan is granted by the AfDB, the Islamic Development Bank or the International Finance Corporation; or
  • the loan is granted in a foreign currency for a duration of ten years or more.

All agreements concerning property located in Morocco are subject to registration and stamp duties.

Foreign lenders must be aware that VAT issues may arise if their supply of services is deemed to be localised in Morocco.

Moroccan law allows for the creation of a wide range of security interests over a broad range of assets. Assets typically available to foreign lenders are real estate, shares, receivables and bank accounts. Foreign lenders are also granted personal guarantees (such as cautionnements and first-demand guarantees).

The mortgage deed must be signed before a Moroccan notary (notaire) in order to be valid. The pledge may be established by notarial deed or by private deed. Non-possessory pledges shall be registered with the National Electronic Registry of Moveable Security Rights (Registre National Electronique des Sûretés Mobilières).

Under the Commercial Code, different regimes exist for pledge of goodwill, non-possessory pledge over tools and equipment, etc, subject to observation of the relevant perfection requirements.

The concept of floating charges does not exist under Moroccan law. Rather, security arrangements are made with respect to each and every asset and type of asset, subject to observation of the relevant perfection requirements.

Moroccan law does not restrict downstream guarantees. The law expressly authorises a Moroccan company in the form of a société anonyme to grant guarantees or securities to secure bonds issued by its subsidiaries. On the contrary, a company in the form of a société à responsabilité limitée cannot grant guarantees to secure bonds or other negotiable securities.

The granting of upstream and cross-stream guarantees must not impair the company’s corporate benefit, nor infringe any statutory objects provisions or prohibition on using the corporate assets wrongfully.

A Moroccan company in the forme of a société anonyme cannot grant any financial assistance in the form of a guarantee or a loan for the acquisition of its own shares by a third party.

A guarantee granted or given by a Moroccan company in the form of a société anonyme requires an approval from its board of directors unless the managing director is provided with a delegation of authority within a fixed limit.

Modalities of the release of security depend on the type of security that has been granted.

Pledges and cautionnements will automatically lapse in the event of a full satisfaction of the secured liabilities. Non-possessory pledges registered with the Registre National Electronique des Sûretés Mobilières require the filing of a release notice in that register.

The release of mortgages is subject to formal requirements in order for the relevant security right to be released from the land register.

The priority of competing security interests is regulated by the DOC. Generally, privileges rank in priority over any other security and, among themselves, rank according to the particular nature of the debt as established by law.

A pledge confers on the creditor the right to be paid on the pledged asset in preference to all other creditors, in the case of the debtor’s failure to pay.

Non-possessory pledges rank among themselves, according to their date of registration in the Registre National Electronique des Sûretés Mobilières.

Contractual subordination is commonly used even though there are no specific provisions under Moroccan law authorising subordination arrangements.

The Public Treasury (for tax collection), the Caisse Nationale de Securité Sociale (which is the state-owned fund that grants certain social rights to workers) and workers as regards their salary amounts benefit from a lien, taking priority over secured and unsecured claims.

A secured lender can enforce the pledged asset when the debtor is in default, subject to formal notice being given to the latter.

The enforcement methods vary according to the security in force. Pledges may be enforced by public sale before the court, or by a judicial attribution of ownership of the pledged property to the creditor, and options allowing a creditor to proceed with the sale of the pledged asset or to become its owner (the so-called pacte commissoire), without recourse to judicial intervention, if such an option is provided for contractually.

The choice of a foreign law as the governing law of the contract or of a foreign jurisdiction will be upheld in Morocco. However, if an application of the foreign law would result in an outcome contrary to Moroccan public order, it can be set aside irrespective of the agreed choice of law.

A foreign judgment or arbitral award against a Moroccan company will be enforceable in Morocco subject to fulfilling the necessary exequatur procedures to recognise that foreign judgment or arbitral award.

As long as security has been created and perfected in accordance with the mandatory laws applicable in Morocco, a foreign lender will ordinarily be able to enforce its rights.

Competent courts may request the loan and security agreement to be translated into Arabic. French translation is tolerated.

Under Moroccan law, debtors who are insolvent are required to file for a judicial reorganisation proceeding (redressement judiciaire) or a compulsory liquidation (liquidation judiciaire) in accordance with the provisions of Book V of the Code of Commerce.

The opening of these proceedings will have the following consequences on creditors’ rights:

  • contractual clauses providing for the automatic termination or acceleration of the contract in the event of reorganisation proceedings are ineffective;
  • suspension or prohibition of any legal action by creditors whose claims arose prior to the opening judgment;
  • the payment of debts incurred prior to the opening judgment is prohibited;
  • interest on loans (and any contractual or statutory interest) as well as all interest for late payment and surcharges will no longer accrue from the date of the judgment opening the proceedings until the date of the judgment adopting the safeguard or continuation plan;
  • the commencement of insolvency proceedings does not freeze the enforcement of security but the court may replace the security with any adequate guarantee if the court deems it necessary; and
  • creditors must file a statement of their claims (déclaration de créances) against the debtor within two months (four months for creditors residing out of Morocco) of the date of the publication of the opening judgment in the “bulletin officiel”.

In bankruptcy proceedings, a debtor’s debts are paid in accordance with the Commercial Code in the following order of priority until all available funds have been used:

  • creditors that have consented to a new cash contribution to the company in order to ensure its continuation in the framework of a conciliation procedure;
  • debts that have arisen regularly after the judgment initiating the safeguard proceedings and that are essential to the continuation of those proceedings or to the activity during the period of preparation of an adequate solution (safeguard, reorganisation, continuation, court-ordered liquidation, etc);
  • debts that have arisen regularly after the judgment initiating the judicial reorganisation proceedings and that are essential to the continuation of those proceedings or to the activity during the period of preparation of an adequate solution (safeguard, reorganisation, continuation, court-ordered liquidation, etc);
  • secured claims;
  • all other unsecured claims (créances chirographaires).

Insolvency proceedings in Morocco are widely seen as being complex, slow and inefficient when it comes to collecting debts. Obtaining transparency on restructuring plans may take at least one year. The simplest liquidation proceedings may be settled in a few months, but more complex cases may last over several years (eg, the liquidation of SAMIR decided in 2016 and still pending).

There are two types of reorganisation procedures that are available to the debtor when it is not insolvent (not in a cessation of payments):

  • the conciliation procedure (procédure de conciliation), which aims to achieve an agreement between the debtor facing financial difficulties and its creditors outside of court. The conciliation agreement is then ratified by the court; and
  • the safeguard procedure (procédure de sauvegarde), which aims to allow a distressed business to overcome its financial difficulties, guarantee the viability of its activities and discharge its debts in order to avoid an imminent cessation of payments or cash flow insolvency. This involves debt rescheduling, as well as debt write-off, on approval of creditors that have declared their claims. This procedure is fully court-supervised. The court adopts the safeguard plan and may approve the rescheduling and reduction of creditors’ claims. The court may also impose uniform payment deadlines on creditors that did not agree to any rescheduling of claims or write-offs (the so-called “non-consenting creditors”).

In addition to the fact that lenders are subject to the priority of payments, transactions concluded and securities granted after a cessation of payments can be declared void by the court.

Project financing is commonly focused on renewable energy, infrastructure and telecommunications projects. The project finance sector in Morocco has been attracting the interest of both local and foreign banks as well as multilateral agencies. The EBRD, the AFD and the AfDB are among those that finance projects in Morocco.

In 2020, Law No. 46-18 of 6 March 2020 amended the legal framework applicable to PPP provided for by Law No. 86-12 of 24 December 2014. Two implementing decrees were published last year. PPP transactions may be commenced by way of solicited or unsolicited proposals.

In December 2022, the PPP Direction of the Minister of Finance published a note setting the guidelines and procedure governing unsolicited proposals allowing a private operator to submit an innovative project to a public entity for implementation.

Also, the report on public establishments and enterprises appended to the 2023 Finance Act provides a summary of PPP projects underway and those in the pipeline. The PPP portfolio covers different activity sectors (health, desalination, irrigation, ports, airports, logistics, social infrastructure, etc).

In practice, some PPP projects were structured outside the scope of Law No. 86-12 of December 2014 on PPP and as such were subject to foreign law.

There are generally no restrictions on foreign ownership of Moroccan real property except in very specific cases. For example, Moroccan law prohibits the acquisition by non-Moroccan people of interests in agricultural land outside urban areas without obtaining a certificate of non-agricultural vocation.

Since 2021, acquisition of agricultural land by Moroccan joint-stock companies (sociétés anonymes) and partnerships limited by shares (sociétés en commandite par actions) is subject to certain conditions.

The key issues to be considered when structuring deals include the following: risk assessment, determining the legal form of the project company and the relevant laws to which those deals are subject as well as the possibility to benefit from any government support or incentive.

There may also be international treaties between the country of residence of the foreign investor and Morocco, which may provide for additional incentives of benefits for certain types of transactions.

Typically, project financings are financed as bilateral or club deals (composed of local and foreign lenders).

Morocco is home to a range of metals and minerals. Under the Moroccan Mining Code, minerals resources form part of the public domain. As such, in all cases, a licence to explore or extract the resource is required.

That being said, the mining sector has long been and is still dominated by phosphates. OCP SA (a State-owned joint stock company) holds a monopoly over the extraction, transformation and sale of phosphates in the country.

Since 2015, Morocco has begun to overhaul and update its legal framework for the environment and sustainable development, in accordance with the provisions of framework law No. 99-12 on the national charter and sustainable development. The main environmental laws applicable to projects are:

  • Law No. 11-03 on the Protection and Conservation of the Environment;
  • Law No. 36-15 on Water;
  • Law No. 49-17 on Environmental Assessment;
  • Law 28-00 on Waste Management and Disposal;
  • The Green Morocco Plan (2008); and
  • Law 77-15 (commonly known as the Zero Mika Law).

Furthermore, the Moroccan Labour Code sets out a panoply of provisions governing, among other things, workplace health and safety.        

Gauvin & Raji Avocats

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Bd. Al Massira
Casablanca
Morocco

+212 661 96 97 67; +212 661 20 86 54

agauvin@gauvin-avocats.com; kraji@gauvin-avocats.com; gauvin-avocats.com/en
Author Business Card

Trends and Developments


Authors



Gauvin & Raji Avocats specialises in the banking and financial sector, with offices in Paris and Casablanca. The firm helps to prepare and draft legal and regulatory reforms and advises its public and private clients, in connection with banking and financial regulation, the structuring of innovative financial instruments, and the creation of financial institutions and sovereign or private investment funds, as well as financial and insurance risk transfer vehicles. Gauvin & Raji Avocats maintains close working relationships with the governments of the countries in which it operates, as well as with professional associations. It assists its clients with the implementation of their projects in several European countries as well as in Africa. The firm’s goal is to foster relations between the European Union and the African Union. It also assists and represents its clients in other regions of the world where the development of their activities is complicated by various risks, including geopolitical risks.

Introduction

For about 15 years, the Moroccan banking and financial sectors have been undergoing profound legal change. To some extent, one can argue that the law has been in advance of (or more mature than) practice. By way of example, the law governing securitisation is a kind of “masterpiece” which is underused, insofar as it seems to be oversophisticated compared to the knowledge of investors; likewise, for ten years now, there has been a law on financial derivatives instruments traded on regulated markets, but no such regulated market has been created so far. On the other hand, one may well point out the lack of laws and regulations that are crucial and of paramount importance for the Kingdom of Morocco, whose ambition is to become a financial centre for the region, meaning North and West Africa.

For the sake of clarity, it is worth distinguishing between the banking sector on the one hand and the financial sector on the other, and we find it interesting to get an overview of these banking and financial markets from both the respective authorities which are in charge of supervising them: Bank Al-Maghrib (BAM – www.bkam.ma) regarding the banking sector and the Moroccan Capital Market Authority (Autorité Marocaine du Marché des Capitaux, or AMMC – www.ammc.ma) regarding the capital markets sector.

Banking Sector

In terms of banking supervision, BAM, which is the central bank of Morocco, has lifted the prudential easing measures taken in the context of COVID-19 and has been continuing its policy aimed at strengthening the resilience of banks and monitoring their exposure to various risks.

Crowdfunding, cloud computing and digitalisation

From the regulatory standpoint, BAM has enacted a framework governing crowdfunding activities and has carried out several important actions aimed at supporting the development of digitalisation of the banking sector.

BAM has supervised the use of cloud computing and the prevention of corruption risks, has enacted several texts to support the launch of crowdfunding instruments and has amended the texts governing payment institutions for the purpose of supporting the enrolment of agent networks and the network of merchants accepting mobile payments.

BAM has also continued its efforts to support and accelerate the digitalisation of financial services. It has thus contributed, along with the various other players, towards the implementation of the online authentication and identification system for users of banking services and to the development of digital trust services.

Transparency

Furthermore, BAM has actively contributed, along with all players within the banking sector, towards the implementation of the important actions which were crowned by the decision of the Financial Action Task Force (FATF – www.fatf-gafi.org), during its plenary meeting in February 2023, to remove Morocco from the list of Jurisdictions under Increased Monitoring, commonly known as the “grey list”. In light of the strength of this progress and due to its enjoying solid economic fundamentals, the Kingdom of Morocco benefited, in April 2023, from a two-year agreement with the International Monetary Fund (IMF) under the Flexible Credit Line (FCL – www.imf.org/en/About/Factsheets/Sheets/2023/Flexible-Credit-Line-FCL), for an amount of about USD5 billion.

Dynamism of Moroccan banks abroad and of the Moroccan market

In 2022, the scope of control of BAM covered a total of 90 credit institutions and similar organisations, distributed between 19 conventional banks, five Sharia-compliant banks (banques participatives), 29 finance companies, six offshore banks, 11 microcredit associations, 18 payment establishments, the Deposit and Management Fund (Caisse de Dépôt et de Gestion, or CDG – www.cdg.ma/fr) and the National Guarantee and Business Financing Company (Caisse Centrale de Garantie, or Tamwilcom – www.tamwilcom.ma), the last two being state-owned financial institutions.

From an international perspective, the dynamism of Moroccan banking and financial players deserves to be emphasised: Moroccan banking groups have 51 subsidiaries and 23 branches in 36 countries, including 27 in Africa, seven in Europe and two in Asia. It is also worth mentioning that foreign banking groups are established in Morocco through either a subsidiary, a branch or a representative office.

Promoting women

BAM’s objective to promote women within the banking sector is twofold:

  • First, women as professionals: BAM has also issued a recommendation to boost the actions of the banking sector in favour of the promotion of women’s economic empowerment in order to increase the employment of women as executives.
  • Second, women as users of banking services: BAM has been aware of the obstacles encountered by rural women, who remain among the most vulnerable segments of the population in terms of financial inclusion. Therefore, BAM has worked to mobilise public and private actors for the development of a nationwide road map for their economic empowerment. To this end, BAM has carried out a mission with the support of the European Bank for Reconstruction and Development (EBRD – www.ebrd.com), with the purpose of assisting in the furtherance of this vast project.

Net zero carbon by 2050

Furthermore, BAM has mobilised, alongside the ministerial authorities, to achieve the national objectives of contributing to the Paris Agreement (unfccc.int/sites/default/files/english_paris_agreement.pdf) by setting up a favourable and incentivising regulatory framework and is working, with the authorities concerned, to define the national strategy.

At the international level, it has contributed to the work of the central banks involved in the Network for Greening the Financial System (NGFS –www.ngfs.net/en), the Sustainable Banking and Finance Network (SBFN –www.sbfnetwork.org) and the Alliance for Financial Inclusion (AFI –www.afi-global.org) in the field of green and sustainable finance.

Customer protection

As far as customer protection is concerned, BAM has worked to increase the comparability of banking costs and services and enhanced the communication to the public of guides and useful information on these services and the rights and obligations in this area.

Furthermore, BAM keeps on working at strengthening transparency and the public’s right to information, improving access to banking products and services, stimulating competition for the benefit of customers and developing the complaints management system. In this context, BAM has enacted texts governing the information given to clients soliciting banks for loans. BAM is also increasing banks’ duties with respect to the closing of accounts.

As part of the processing of complaints, it has been continuing its policy of promoting the Moroccan Centre for Banking Mediation (Centre Marocain de Médiation Bancaire–cmmb.ma), in particular, through its support with targeted communication actions and encouraging users of banking services to use its services, in connection with the amicable settlement of disputes.

Capital Markets Sector

In 2021, the AMMC presented its three-year Strategic Plan 2021-2023 (www.ammc.ma/fr/ammc/plan-strategique) with the major ambition of promoting the capital markets as a tool for the financing of economic recovery. Through this second strategic plan, the AMMC provides strong support measures capable of initiating a recovery dynamic. This strategic plan is based on four main pillars:

  • facilitating the use of capital market financing;
  • promoting regulation adapted and contributing to innovation;
  • strengthening the protection of savings by consolidating the new supervision approach; and
  • accelerating the modernisation of the AMMC and including it in a digital transformation process.

In 2021, the AMMC also introduced the annual publication of its priority actions (www.ammc.ma/sites/default/files/2023-02/Actions%20Prioritaires%202023.pdf), which obliges the authority to take into account changes in its environment and the progress made. These annual priorities are the subject of discussions between the AMMC and market players to better meet the expectations of the latter, while respecting, of course, the general interest.

Facilitating the use of financing by the capital markets

The AMMC has contributed to the establishment of a modern, flexible and evolving legislative and regulatory framework likely to encourage the financing of companies by the market, thanks to:

  • amending the AMMC circular on financial transactions and information, introducing in particular an extension of the definition of qualified investor (i) to the subsidiaries of entities meeting the criteria allowing them to benefit, on request, from the status of qualified investor, as well as (ii) to both the deposit guarantee funds;
  • finalising the AMMC circular on financial investment advisers (conseillers en investissements financiers), making it possible to regulate the activity of advising investors and issuers through rules of registration, professional practice and ethics; and
  • supporting the operationalisation of the latest amendment to the law on public limited companies, concerning measures to strengthen the governance of issuers and the protection of investors.

Promoting the creation and implementation of innovative products

Supporting innovation, the AMMC carried out several actions in 2022 to enrich the range of financial instruments available on the market, in particular:

  • finalising the regulatory mechanism governing collaborative financing;
  • expanding the Sharia-compliant finance (finance participative) offering, through the adoption of decrees relating to investment and financing Sukuk certificates and the presentation to the Supreme Council of the Ulemas (Conseil Supérieur des Oulémas, or CSO) of a Sharia-compliant stock market index project;
  • supporting the development of the fintech sector by adopting a multidimensional approach, through:
    1. launching a proof of concept using blockchain technology in close collaboration with certain market players and relating to a bond issue by private placement, thus representing the first bond issue ever launched in Morocco on a blockchain platform;
    2. implementing the legislative framework for crypto-assets by overseeing a national working group on crypto-assets (GTNCA);
    3. launching a fintech portal on the AMMC website to allow project leaders to discuss their projects and the legal and regulatory framework applicable to them with the AMMC.

Pursuing actions in favour of sustainable finance

The AMMC has been continuing its commitment to the development of sustainable finance through a series of actions aimed at promoting the integration of sustainability aspects into the practices of market players, both issuers and market participants. Similarly, the AMMC has signed partnership agreements (FSD Africa, IFC –fsdafrica.org/partner-organisation/ifc), carried out awareness-raising actions on ESG (environment, social and governance) aspects and deployed a tool to assess the compliance and quality of ESG reports. In addition, the AMMC and the Casablanca Stock Exchange organised a meeting of the signatories of the “Marrakech Pledge” for “fostering green capital markets in Africa” launched at COP22 (marrakechpledge.com). This meeting was an opportunity to reflect upon the achievements of this initiative, stimulate consideration of a new action plan and welcome six new signatories (three stock exchanges and three capital market regulators).

Educating the general public about capital markets

The AMMC gives pride of place to financial education actions aimed at the general public, in particular individuals. In this context, the AMMC launched its communication strategy for the general public and improved the scope of its actions aimed at the public by utilising new communication methods (radio campaigns, info sheets and educational videos: www.ammc.ma/fr/search/node?keys=capsule).

Controlling risks by disseminating good practices through digitalisation

The consolidation of the new supervision approach for the protection of savings is a pillar of the 2021-2023 AMMC Strategic Plan. The past two years have seen an intensification of controls and an increase in the coverage rate, which reached 97% in 2022 as against 50% in 2021. The 2021-2022 period was marked by the completion of 35 inspection missions, an increase of 94% compared to the 2019-2020 period. In terms of anti-money laundering and countering the financing of terrorism (AML & CFT), the AMMC has updated its circular on the duty of vigilance and has strengthened its approach to raising awareness and supporting market players. It now bases its controls on the risk mapping established in 2021 and the national risk assessment, thus ensuring the technical compliance and effectiveness of the AML & CFT system of market participants with regard to the standards of the FATF and the Financial Action Task Force of Middle East and North Africa (FATFMENA). Finally, in the fight against corruption, the AMMC, in close collaboration with the National Authority for Probity, Prevention and the Fight against Corruption (Instance Nationale de la Probité, de la Prévention et de la Lutte contre la Corruption, or INPPLC –www.inpplc.ma/fr), carried out actions to raise awareness among market players and has published, jointly with this body and the other regulators (BAM and the Supervisory Authority of Insurance and Social Welfare (Autorité de Contrôle des Assurances et de la Prévoyance Sociale, or ACAPS – www.acaps.ma), which is the Moroccan authority supervising the insurance market), a guide against corruption intended for professionals.

Gauvin & Raji Avocats

Twin Towers
5th Floor
Bd. Zerktouni
Bd. Al Massira
Casablanca
Morocco

+212 661 96 97 67; +212 661 20 86 54

agauvin@gauvin-avocats.com; kraji@gauvin-avocats.com; gauvin-avocats.com/en
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Law and Practice

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Gauvin & Raji Avocats specialises in the banking and financial sector, with offices in Paris and Casablanca. The firm helps to prepare and draft legal and regulatory reforms and advises its public and private clients, in connection with banking and financial regulation, the structuring of innovative financial instruments, and the creation of financial institutions and sovereign or private investment funds, as well as financial and insurance risk transfer vehicles. Gauvin & Raji Avocats maintains close working relationships with the governments of the countries in which it operates, as well as with professional associations. It assists its clients with the implementation of their projects in several European countries as well as in Africa. The firm’s goal is to foster relations between the European Union and the African Union. It also assists and represents its clients in other regions of the world where the development of their activities is complicated by various risks, including geopolitical risks.

Trends and Development

Authors



Gauvin & Raji Avocats specialises in the banking and financial sector, with offices in Paris and Casablanca. The firm helps to prepare and draft legal and regulatory reforms and advises its public and private clients, in connection with banking and financial regulation, the structuring of innovative financial instruments, and the creation of financial institutions and sovereign or private investment funds, as well as financial and insurance risk transfer vehicles. Gauvin & Raji Avocats maintains close working relationships with the governments of the countries in which it operates, as well as with professional associations. It assists its clients with the implementation of their projects in several European countries as well as in Africa. The firm’s goal is to foster relations between the European Union and the African Union. It also assists and represents its clients in other regions of the world where the development of their activities is complicated by various risks, including geopolitical risks.

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