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

    EBA Analyzes Impact of Unwind Mechanism of Liquidity Coverage Ratio

    EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.

    November 19, 2020 WebPage Regulatory News
    News

    ECB Outlines Views on Possible Changes to AnaCredit Rule and TLTROs

    In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.

    November 19, 2020 WebPage Regulatory News
    News

    IASB Begins First Phase of Post-Implementation Review of IFRS 9

    IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.

    November 18, 2020 WebPage Regulatory News
    News

    FSB Report Examines Progress in Resolvability of Systemic Institutions

    FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.

    November 18, 2020 WebPage Regulatory News
    News

    EBA Benchmarks National Insolvency Frameworks Across EU

    EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.

    November 18, 2020 WebPage Regulatory News
    News

    FSB Reports Assess Impact of Pandemic on Financial Stability

    FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.

    November 17, 2020 WebPage Regulatory News
    News

    RBNZ Consults on Implementation of Capital Review Changes

    RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.

    November 17, 2020 WebPage Regulatory News
    News

    IASB Announces Andreas Barckow as the New Chair from July 2021

    The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.

    November 17, 2020 WebPage Regulatory News
    News

    HKMA Consults on Capital Rules for Bank Equity Investments in Funds

    HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.

    November 17, 2020 WebPage Regulatory News
    News

    ESRB Supports Extension of Macro-Prudential Measure by Swedish FSA

    ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).

    November 17, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6153