General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
May 29, 2018

IMF published its staff report and selected issues report post conclusion of the 2018 Article IV consultation with Colombia. Directors noted that the banking system has been resilient amid the economic slowdown, reflecting partly effective financial supervision and ample capital and liquidity. They welcomed the recent regulatory measures to homogenize banks’ loan restructuring practices and to bring regulation closer to Basel III standards, including through the implementation of the Conglomerates Law. Finalizing the Conglomerates Law and moving closer to Basel III standards will strengthen financial stability.

The staff report reveals that policy measures in Colombia since the 2017 Article IV consultation have been broadly aligned with past IMF advice. Regulatory changes to risk management and loan restructuring practices of banks have improved the monitoring of nonperforming loans (NPLs) while the implementation of the conglomerate laws has continued. Although rising (to 4.3% in December 2017, from 3.3% a year before), NPLs are expected to start decreasing in the second half of 2018. Provisions fell to 126% of NPLs but continue to be ample. tier 1 and regulatory capital increased to 12.4% and 18.6% of risk-weighted assets, respectively, by December 2017. SFC, which is the financial supervisor introduced a new regulation, in October 2017, to foster early detection of credit risk and intensified bank-by-bank monitoring. Official stress tests suggest banks are resilient to macroeconomic shocks. The authorities performed a top-down stress testing exercise, in which the economy experiences a slowdown over six quarters. The scenario would lead to a significant deterioration of the lending portfolio, with NPLs nearly doubling, but the aggregate solvency ratio would remain above the 9% regulatory minimum. 

The Conglomerates Law that follows FSAP recommendations was passed in September 2017 and will come into effect in 2018. Draft regulation specifying capital adequacy and related-party exposures for conglomerates has been circulated for comments and a final version is expected to come into effect by September 2018. Capital requirements for all banks are to be gradually strengthened over a six-year period. The plan is to introduce tier 1 capital minimum of 6%, along with the conservation and domestic systemically important bank (D-SIB) buffers at 2.5% and 1%, respectively, by 2023. During 2018, the plan is to modify the definition of capital and risk-weighted assets to bring them closer to international standards. Modification of the liquidity coverage ratio to differentiate by type of depositor, in accordance with Basel III, is in progress and is expected to be sent for comments during the first half of 2018. The plan to introduce a liquidity indicator similar to the net stable funding ratio, while taking into account currency mismatches and roll-over risks of derivatives, is in progress and is to be sent for comments during the first half of 2018. 

The selected issues report examines the outlook for export growth, the significant reduction in labor informality, and the fiscal response to the oil shock in Colombia. 

 

Related Links

Keywords: Americas, Colombia, Banking, Basel III, Conglomerates Law, NPLs, Stress Testing, Article IV, FSAP, IMF

Related Insights
News

BCBS Finds Liquidity Risk Management Principles Remain Fit for Purpose

BCBS completed a review of its 2008 Principles for sound liquidity risk management and supervision. The review confirmed that the principles remain fit for purpose.

January 17, 2019 WebPage Regulatory News
News

HKMA Urges Local Banks to Start Working on FRTB Implementation

HKMA announced that it plans to issue a consultation paper on the new market risk standard in the second quarter of 2019.

January 17, 2019 WebPage Regulatory News
News

EBA Finalizes Guidelines for High-Risk Exposures Under CRR

EBA published the final guidelines on the specification of types of exposures to be associated with high risk under the Capital Requirements Regulation (CRR). The guidelines are intended to facilitate a higher degree of comparability in terms of the current practices in identifying high-risk exposures.

January 17, 2019 WebPage Regulatory News
News

MAS Guidelines on Risk Mitigation Requirements for OTC Derivatives

MAS published guidelines on risk mitigation requirements for non-centrally cleared over-the-counter (OTC) derivatives contracts.

January 17, 2019 WebPage Regulatory News
News

BoE Publishes the Schedule for Statistical Reporting for 2019

BoE published the updated schedule for statistical reporting for 2019. The reporting institutions use the online statistical data application (OSCA) to submit statistical data to BoE.

January 16, 2019 WebPage Regulatory News
News

PRA Delays Final Direction on Reporting of Private Securitizations

PRA and FCA have delayed the issuance of final direction, including the final template, on reporting of private securitizations, from January 15, 2019 to the end of January 2019.

January 15, 2019 WebPage Regulatory News
News

SNB Updates Forms on Supervisory Reporting for Banks

SNB published Version 1.7 of reporting forms (AUR_U, AUR_UEA, AUR_UES, AURH_U, AUR_K, AUR_KEA, and AURH_K) and the related documentation for supervisory reporting on an individual and consolidated basis.

January 15, 2019 WebPage Regulatory News
News

BCBS Finalizes Market Risk Capital Framework and Work Program for 2019

BCBS published the final framework for market risk capital requirements and its work program for 2019. Also published was an explanatory note to provide a non-technical description of the overall market risk framework, the changes that have been incorporated into in this version of the framework and impact of the framework.

January 14, 2019 WebPage Regulatory News
News

EBA Single Rulebook Q&A: First Update for January 2019

EBA published answers to 13 questions under the Single Rulebook question and answer (Q&A) updates for this week.

January 11, 2019 WebPage Regulatory News
News

PRA Proposes to Amend Supervisory Statement on Credit Risk Mitigation

PRA published the consultation paper CP1/19 that is proposing changes to the supervisory statement (SS17/13) on credit risk mitigation.

January 10, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2473