When banks run into trouble, a well-established legal and regulatory framework kicks in—one overseen by Bank Al-Maghrib, Morocco’s central bank. Backed by national credit legislation and the country’s commercial code, the institution is equipped with a robust set of tools to anticipate financial instability or step in when banks start to falter.
Banks that are considered systemically important must take proactive steps to prepare for potential crises. They’re required to develop recovery plans—detailed roadmaps outlining how the bank would restore stability without depending on taxpayer money. These plans are regulated by a circular that outlines both their content and how they must be submitted to the supervisory authority.
When signs of weakness begin to appear—like declining profits, shaky finances, or internal control failures—Bank Al-Maghrib can take formal action. One of the first steps is issuing an injunction, which compels the affected bank to submit a corrective recovery plan. This process also expects active involvement from shareholders who hold at least 5% of the institution’s capital. In less severe cases, the central bank may issue a warning instead, demanding the bank improve its management or bring its practices in line with regulations.
If these early interventions don’t lead to meaningful change, the Wali of Bank Al-Maghrib, the institution’s top authority, has the power to go further—after consulting the disciplinary committee. This may include suspending executives, restricting specific banking activities, appointing a temporary administrator, or even revoking the bank’s license entirely.
A provisional administrator is usually brought in when a bank’s leadership is no longer able to function effectively, when proposed rescue plans fall short, or when earlier warnings are ignored. Appointed by the Wali—with or without input from the disciplinary committee, depending on how urgent the situation is—this administrator assumes full control of operations. Their job is to thoroughly assess the bank’s condition, recommend corrective measures, and regularly report findings back to Bank Al-Maghrib.
One key safety net in this system is the collective deposit guarantee fund. Managed by the Moroccan company set up specifically for this purpose, and co-owned by Bank Al-Maghrib and participating banks, this fund is designed to protect depositors. If a bank can no longer give customers access to their money, the fund will reimburse depositors up to a set limit. In exceptional cases, it may also inject capital into a struggling bank or take part in its operational management.
On the legal front, several restructuring options are available to help salvage a weakened bank. These might involve selling off assets, breaking up the institution, or arranging a full or partial acquisition by a more stable player in the market. Depending on the scale of risk posed to the broader financial system, these decisions can be made either by the provisional administrator or directly by the Wali.
To ensure that responses to financial crises are coordinated across the public sector, Bank Al-Maghrib has a formal agreement in place with the Ministry of Finance and the Moroccan Capital Markets Authority. This agreement provides for rapid information sharing and joint actions aimed at reducing the fiscal impact of bank failures. A dedicated committee, led by the finance minister and including key supervisory authorities, is in charge of managing such high-stakes situations.
If all other options have been exhausted and recovery is no longer viable, the failing bank’s license is revoked. At that point, a court-appointed liquidator takes over, selected based on a recommendation from the Wali. This official is responsible for overseeing the wind-down process and must submit quarterly progress reports. Meanwhile, depositors are automatically covered by the guarantee fund and do not need to take any steps to recover their money.
