SARB Consults on Deposit Insurance Funding Model for South Africa
SARB published a discussion paper that describes funding model for the proposed deposit insurance scheme for South Africa. The paper also addresses the implications for banks in terms of the contributions they would be required to make to the deposit insurance fund, which will be established in terms of the Financial Sector Laws Amendment Bill (FSLAB). Once the FSLAB is promulgated, the provisions of the FSLAB, together with these proposals, will form the basis of secondary legislation. The comment period for this proposal ends on October 16, 2020.
SARB had published an initial discussion paper on designing a deposit insurance scheme for South Africa in May 2017. Significant consultations with banks, through the Banking Association of South Africa (BASA), resulted in a more cost-effective model of funding. Although the funding model has been informally shared with banks, this discussion paper provides banks with the opportunity to formally comment on the revised funding model. The discussion paper explains
- the tiered funding model and emergency funding that will be available to the future Corporation for Deposit Insurance or CoDI
- how the governance and administration will affect the operational costs of the Corporation for Deposit Insurance and the levy paid by members
- the processes for the calculation and payment of members’ financial contributions to the deposit insurance fund
- how instances of potential non-compliance by banks will be dealt with
The policy proposals take into account country-specific characteristics and applicable international standards and they are aimed at contributing to the creation of a deposit insurance scheme that would enhance the financial safety net to optimally serve the needs of the South African financial system. The proposed funding model has been subject to a peer review by FSB and the International Association for Deposit Insurers (IADI), in addition to a Financial Sector Assessment Program (FSAP) review by IMF and World Bank. SARB also expects to publish, in the future, a discussion paper covering the use of the deposit insurance fund for payout and resolution support.
Related Links
Comment Due Date: October 16, 2020
Keywords: Middle East and Africa, South Africa, Banking, FSLAB, Deposit Insurance Fund, CoDI, SARB
Related Articles
BIS Quarterly Review Discusses Developments in Fintech and ESG Space
BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.
BCBS to Consult on Supervisory Practices for Climate Risks by Year-End
The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards
OCC Identifies Operational Risk Deficiencies in MUFG Union Bank
The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.
EC Rule on Contractual Recognition of Write Down and Conversion Powers
The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.
ECB to Consider Climate Risks When Reviewing Collateral Framework
In a response to the questions posed by a member of the European Parliament, the President Christine Lagarde highlighted the commitment of the European Central Bank (ECB) to an ambitious climate-related action plan along with a roadmap, which was published in July 2021.
SRB Provides Update on Approach to Prior Permissions Regime
The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.
APRA Issues Further Guidance on Application of Securitization Standard
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.
ACPR Publishes Corrective Version of RUBA Taxonomy
The French Prudential Control and Resolution Authority (ACPR) published the corrective version of the RUBA taxonomy Version 1.0.1, which will come into force from the decree of January 31, 2022.
Nordea Bank and EIB Sign Agreement to Fund Green Projects in Nordics
The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.
APRA Publishes FAQs on Capital Treatment of Overseas Subsidiaries
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.
