Featured Product

    FSB Reviews Deposit Insurance and Resolution Framework in South Africa

    March 16, 2020

    FSB published results of a peer review on the bank resolution and deposit insurance frameworks in South Africa. The review focused on steps taken by the authorities to implement reforms in these areas, including by following up on the relevant IMF-World Bank Financial Sector Assessment Program (FSAP) recommendations and G20/FSB commitments. Although good progress has been made in recent years toward implementing both these frameworks in the country, the review found that additional work needs to be done to ensure that the new measures can be implemented effectively.

    The report highlights that the framework for dealing with failing banks is being overhauled through the Financial Sector Laws Amendment Bill 2018 (FSLAB), which was published for comment in September 2018 and is with the Cabinet. Under the proposed framework, SARB will be the sole resolution authority for all banks and for any non-bank systemically important financial institutions. Once implemented, the proposed FSLAB amendments will address past recommendations of the FSAP and FSB by providing the authorities with an enhanced framework to plan for and undertake resolution. The authorities have applied lessons learned from recent bank failures to inform the proposals for adoption of a resolution regime that is broadly aligned with the FSB Key Attributes of Effective Resolution Regimes for Financial Institutions. The review highlights that work is needed in the following areas to ensure the new measures can be implemented effectively:

    • Setting a clear implementation roadmap, including the identification and sequencing of key policies, timelines for delivery, and resource requirements
    • Enhancing the operating model for SARB as resolution authority
    • Reviewing emergency liquidity arrangements in light of the new resolution framework
    • Introducing a mechanism for ex-post recovery, from the industry, of public funds used for resolution

    The review found that South Africa is the only FSB jurisdiction without an explicit deposit insurance framework. The authorities have, over the past few years, been working to introduce an explicit framework. The draft FSLAB includes provisions for the establishment of the Corporation of Deposit Insurance (CoDI). SARB is working diligently to operationalize the CoDI when the FSLAB is promulgated. Despite these accomplishments, further work is needed to address potential misalignment in the proposed framework vis-à-vis the Core Principles for Effective Deposit Insurance Systems (IADI Core Principles). Despite these accomplishments, further work is needed to address potential misalignment in the proposed framework vis-à-vis the IADI Core Principles:

    • Developing the functional expertise at the deposit insurer
    • Launching a comprehensive public awareness campaign covering different stages of the establishment of the deposit insurance system
    • Reviewing the design features after the deposit insurance system is established
    • Enhancing the funding structure of the deposit insurance fund by building up the size of the equity tranche, determining a long-term target fund size and setting a reasonable time frame to achieve it

     

    Related Links

    Keywords: Middle East and Africa, South Africa, Peer Review, Deposit Insurance, G20, FSAP, IADI, Resolution Planning, Resolution Framework, SARB, FSB

    Featured Experts
    Related Articles
    News

    UK Government to Set Out Rules on Wind-down of Critical Benchmarks

    HM Treasury notified that, after considering all responses, the government intends to bring forward further legislation, when the Parliamentary time allows, to address issues identified in the consultation on supporting the wind-down of critical benchmarks.

    May 07, 2021 WebPage Regulatory News
    News

    EIOPA Launches Stress Test for Insurance Sector in EU

    EIOPA launched the 2021 stress test for the insurance sector in EU.

    May 07, 2021 WebPage Regulatory News
    News

    UK Authorities Publish Third Edition of Regulatory Initiatives Grid

    UK authorities jointly published the third edition of Regulatory Initiatives Grid setting out the planned regulatory initiatives for the next 24 months.

    May 07, 2021 WebPage Regulatory News
    News

    EC Consults on Regulation on Non-Financial Sustainability Disclosures

    EC is requesting feedback on the proposed Commission Delegated Regulation on the content, methodology, and presentation of information that large financial and non-financial undertakings should disclose about their environmentally sustainable economic activities under the Taxonomy Regulation.

    May 07, 2021 WebPage Regulatory News
    News

    OSFI Outlines Prudential Policy Priorities for Coming Months

    OSFI has set out the near-term priorities for federally regulated financial institutions and federally regulated private pension plans for the coming months until March 31, 2022.

    May 06, 2021 WebPage Regulatory News
    News

    BIS Announces TechSprint on Innovative Green Finance Solutions

    Under the Italian G20 Presidency, BIS Innovation Hub and the Italian central bank BDI launched the second edition of the G20 TechSprint on the lookout for innovative solutions to resolve operational problems in green and sustainable finance.

    May 06, 2021 WebPage Regulatory News
    News

    ACPR Publishes Version 1.0.0 of RUBA Taxonomy

    ACPR published Version 1.0.0 of the RUBA taxonomy, which will come into force from the decree of January 31, 2022.

    May 06, 2021 WebPage Regulatory News
    News

    EBA Proposed Regulatory Standards for Central Database on AML/CFT

    EBA proposed the regulatory technical standards on a central database on anti-money laundering and countering the financing of terrorism (AML/CFT) in EU.

    May 06, 2021 WebPage Regulatory News
    News

    ECB Responds to EC Consultation on Crisis Management Framework

    ECB published its response to the targeted EC consultation on the review of the bank crisis management and deposit insurance framework in EU.

    May 06, 2021 WebPage Regulatory News
    News

    BCBS, CPMI, and IOSCO to Survey Market Participants on Margin Calls

    BCBS, CPMI, and IOSCO (the Committees) are inviting entities that participate in market infrastructures and securities markets through an intermediary as well as non-bank intermediaries to complete voluntary surveys on the use of margin calls.

    May 05, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6942