The sale of a credit institution such as a bank or microfinance institution in Cameroon necessitates compliance with a strict legal and regulatory process overseen by the Ministry of Finance (MINFI) and the Central African Banking Commission (COBAC).
The transfer of ownership of a credit institution cannot be effected in the same manner as a standard commercial transaction; the process must be carefully structured and executed in accordance with the applicable legal and regulatory requirements.
In accordance with Regulation No. COBAC R-2016/02 relative to the changes in the status of credit institutions, notwithstanding the conditions stipulated by the regulations in force, the application for prior authorization for a total sale of a business or a partial sale of assets must include, in particular;
The articles of association of the transferring company.
Annual financial statements certified by the statutory auditors, including balance sheets and income statements for the last three financial years of the selling credit institution and the transferee entity.
Minutes of meeting of the transferor credit institution or of the deliberative body of the transferee entity authorizing the sale.
The report of the Board of Directors of the selling credit institution and, where applicable, of the transferee entity, addressed to the shareholders.
STEPS TO SELL A CREDIT INSTITUTION IN CAMEROON
1. Secure COBAC and MINFI Approval
By reason of the significant impact that any such change may have on the financial sector and the broader economy, any alteration in major shareholding or transfer of control requires explicit regulatory authorization from the competent authorities.
Transfer of Shares: Any transaction involving the acquisition or disposal of shares that crosses the prescribed thresholds typically 10%, 20%, 33%, or 50% of voting rights must receive the prior approval of the Central African Banking Commission (COBAC).
Application Files: Both the buyer and the seller must compile detailed application files, proving the legal, financial, and technical capabilities of the new buyer.
Fit and Proper Test: The buyer's directors, executives, and major shareholders will be required to undergo a thorough "fit and proper" assessment by the regional monetary authorities to ensure the continued stability of the institution.
2. Conduct Financial and Legal Audits
Prior to initiating the sale of a credit institution, comprehensive preparations must be made to ensure that the institution is in a position to withstand extensive due diligence scrutiny.
Financial Audits: Prospective buyers will conduct rigorous scrutiny of the loan portfolio, asset quality, liquidity ratios, and non-performing loans (NPLs). All financial statements will be required to be validated and certified by a qualified public accountant.
Regulatory Compliance Check: Full adherence to COBAC’s prudential metrics including capital adequacy and risk concentration is a strict prerequisite; any lingering regulatory penalties or compliance infractions must be completely remediated or explicitly factored into the transaction valuation.
3. Valuation and Structuring the Deal
Valuation: Assess the market value of the financial institution using standard sector metrics, including Price-to-Earnings and Price-to-Book ratios, while performing deep-dive due diligence on the structural integrity of its loan and deposit books.
Deal Structure: Define the transaction structure as either an Asset Sale (carving out specific branches, loan portfolios, or network infrastructure) or a Share Sale (transferring the entire legal entity along with its COBAC license). While share sales are the industry norm for financial institutions, they require the buyer to absorb all historical and legacy liabilities.
4. Close the Transaction
Once regulatory approvals are granted:
Legal Drafting: Collaborate with expert Cameroonian corporate attorneys to structure and draft the core transaction documentation, whether a Share Purchase Agreement (SPA) or an Asset Purchase Agreement (APA).
Public Announcements: To ensure transparency and protect depositors and broader stakeholders, statutory notices of ownership transfer are typically required to be published in prominent national newspapers, such as the Cameroon Tribune.