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

    EU Amends CRD4 and CRD5 as Part of Capital Markets Recovery Package

    EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.

    February 26, 2021 WebPage Regulatory News
    News

    EU Committee Recommends Systemic Risk Buffer of 4.5% in Norway

    The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.

    February 25, 2021 WebPage Regulatory News
    News

    PRA Clarifies Approach to Onshoring of Credit Risk Rules for UK Banks

    In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.

    February 25, 2021 WebPage Regulatory News
    News

    FSB Sets Out Work Priorities for 2021

    In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.

    February 25, 2021 WebPage Regulatory News
    News

    EU Publishes Corrigendum to Revised Capital Requirements Regulation

    EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).

    February 25, 2021 WebPage Regulatory News
    News

    ESAs Issue Statement on Application of Sustainability Disclosures Rule

    ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).

    February 25, 2021 WebPage Regulatory News
    News

    EC Consults on Crisis Management and Deposit Insurance Frameworks

    EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.

    February 25, 2021 WebPage Regulatory News
    News

    HKMA Enhances Loan Guarantee Scheme to Alleviate Pressure on SMEs

    HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.

    February 24, 2021 WebPage Regulatory News
    News

    EBA Proposes Standards for Supervisory Cooperation Under IFD

    EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.

    February 24, 2021 WebPage Regulatory News
    News

    BoE Addresses Banks in Scope of First Resolvability Assessment

    BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.

    February 24, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6629