Featured Product

    BoM Revises Guideline on Credit Concentration Risk

    August 22, 2019

    BoM published the guideline on the regulatory credit concentration limits and the basic framework of credit concentration risk management to be put in place by financial institutions. BoM has amended Annex I of the guideline to require the exposure value of on-balance sheet items to be defined as the accounting value of the exposure, net of specific provisions and value adjustments. Alternatively, a financial institution may consider the exposure value gross of specific provisions and value adjustments. Details on the computation of Fund Based and Non-Fund Based exposures have been removed. The changes in the guideline shall be applicable with immediate effect.

    The guideline applies to all banks and non-bank deposit-taking institutions licensed under the Banking Act 2004. The guideline stipulates that a financial institution shall report to BoM on a quarterly basis, in the required form and manner, all information related to its large credit exposures, including exemptions permitted under this guideline. A financial institution shall develop credit policy, which shall comprise the credit concentration risk policy. This should include the principles and objectives governing the extent to which they are willing to accept credit concentration risk. The policy shall set out prudent rules and internal limits for granting credit to a single customer and its related parties, which shall not exceed the stipulated regulatory limits. A financial institution shall at least once a year conduct stress tests of its major credit risk concentrations and review the results of those tests to identify and respond to potential changes in market conditions that could inversely impact the performance of the financial institution. The results of the stress test shall be made available to BoM for examination.

    BoM will assess the adequacy of processes, procedures, and policies put in place by a financial institution to ensure that it does not face excessive concentration risk by way of over exposure to a customer, sector, interlinked industries, and financial institutions, among others. When the risks arising from credit risk concentrations are not adequately addressed, BoM may take appropriate action, including prohibiting the institution from taking additional exposure and imposing a higher capital charge. Any financial institution, which is in non-compliance with the requirements of this guideline, shall within three months of the coming into effect of this guideline submit a plan showing the manner in which it will achieve compliance. This guideline has been intended to align the current BoM framework with the BCBS norms in the standard on “Supervisory Framework for measuring and controlling large exposures,” which was published in April 2014.

     

    Related Links 

    Effective Date: August 22, 2019

    Keywords: Middle East and Africa, Mauritius, Banking, Concentration Risk, Credit Risk, Large Exposures, Guideline, BoM

    Featured Experts
    Related Articles
    News

    APRA Updates Lists of Validation and Derivation Rules in December 2019

    APRA updated the lists of the Direct to APRA (D2A) validation and derivation rules for authorized deposit-taking institutions, insurers, and superannuation entities.

    December 13, 2019 WebPage Regulatory News
    News

    APRA Finalizes Prudential Standard for Credit Risk Management of Banks

    APRA updated the prudential standard on credit risk management requirements (APS 220) for authorized deposit-taking institutions, post a public consultation.

    December 12, 2019 WebPage Regulatory News
    News

    EIOPA Consults on Guidelines on ICT Security and Governance

    EIOPA issued a consultation on guidelines on the Information and Communication Technology (ICT) security and governance by insurers.

    December 12, 2019 WebPage Regulatory News
    News

    BCBS Consults on Design of Prudential Treatment for Crypto-Assets

    BCBS published a discussion paper on the design of prudential treatment for crypto-asset exposures of banks.

    December 12, 2019 WebPage Regulatory News
    News

    NCUA Approves Delay of Risk-Based Capital Rules Until January 2022

    The NCUA Board held its eleventh open meeting of 2019 and approved a final rule to delay the effective date of the risk-based capital rules for credit unions to January 01, 2022.

    December 12, 2019 WebPage Regulatory News
    News

    APRA Issues Operational Risk Rules, Consults on Reporting Requirements

    APRA published an updated prudential standard APS 115 that sets out operational risk requirements for authorized deposit-taking institutions in Australia.

    December 11, 2019 WebPage Regulatory News
    News

    ESMA Updates Q&A on European Benchmarks Regulation in December 2019

    ESMA updated the question and answers (Q&A) document on the European Benchmarks Regulation.

    December 11, 2019 WebPage Regulatory News
    News

    APRA Decides to Keep Countercyclical Capital Buffer for Banks at 0%

    APRA announced its decision to keep the countercyclical capital buffer (CCyB) for authorized deposit-taking institutions on hold at zero percent.

    December 11, 2019 WebPage Regulatory News
    News

    ESMA on Draft Amendments to Indices and Recognized Exchanges Under CRR

    ESMA issued the final report on draft amendments to the Implementing Regulation (EU) 2016/1646, which specifies the main indices and recognized exchanges, under the Capital Requirements Regulation (CRR), that are relevant to credit institutions and investment firms subject to prudential requirements and trading venues.

    December 11, 2019 WebPage Regulatory News
    News

    FED Extends Consultation Period for Capital Requirements for Insurers

    FED is extending comment period for the proposed rule establishing risk-based capital requirements for depository institution holding companies that are significantly engaged in insurance activities.

    December 10, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4316