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
EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
EP Reaches Agreement on Corporate Sustainability Reporting Directive
The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).
PRA Consults on Model Risk Management Principles for Banks
The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.
EC Regulation Amends Standards for Calculating Credit Risk Adjustments
The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
HKMA Announces Launch of Data Repository on Sustainable Finance
The Hong Kong Monetary Authority (HKMA) announced that the Green and Sustainable Finance (GSF) Cross-Agency Steering Group has launched the information and data repositories and outlined the progress made in advancing the development of green and sustainable finance in Hong Kong.
BIS Hub Updates Work Program for 2022, Announces New Projects
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance
The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.
NGFS Report on Integration of G-Cubed Model into NGFS Scenarios
The Network for Greening the Financial System (NGFS) published a report that explores the feasibility of integrating the G-Cubed general equilibrium model into the NGFS suite of models.
US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
EIOPA Consults on Review of Securitization Framework in Solvency II
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.