BOM issued a guideline that sets out the minimum standards for banks in respect of their cross-border exposure. The guideline provides a risk-based management framework to mitigate the key cross-border banking risks. The guideline, developed in consultation with banks, supplements the existing guidelines in respect of the identification, measurement, management, and mitigation of credit risks. The guideline became applicable immediately on publication—that is, September 04, 2020—to banks licensed under the Banking Act 2004.
Regarding regulatory reporting, the guideline states that where a bank is affected by a material increase in underlying risks, such as credit, legal, or reputational risks, in connection with its cross-border exposure or is approached by foreign authorities regarding such matters, it shall immediately inform BOM. For transitional arrangements, banks shall fully implement the requirements of this guideline within three months from its effective date. The requirements under this guideline will not apply to fully cash collateralized cross-border exposure. However, banks are still expected to carry out a proper risk assessment before engaging in such transactions.
This guideline on cross-border exposure supplements the existing guidelines issued by BOM. These existing guidelines include the guideline on country risk management, the guideline on credit risk management, and the guideline on credit concentration risk.
Keywords: Middle East and Africa, Mauritius, Banking, Credit Risk, Concentration Risk, Cross-Border Exposure, BOM
Previous ArticleIFSB to Review Framework and Strategy for Islamic Finance
APRA issued a letter on the loss-absorbing capacity (LAC) requirements for domestic systemically important banks (D-SIBs) and published a discussion paper, along with the proposed the prudential standards on financial contingency planning (CPS 190) and resolution planning (CPS 900).
The European Commission (EC) launched a call for evidence, until March 18, 2022, as part of a comprehensive review of the macro-prudential rules for the banking sector under the Capital Requirements Regulation (CRR) and Directive (CRD IV).
The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups.
The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.
The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.
Through a letter addressed to the banking sector entities, the Office of the Superintendent of Financial Institutions (OSFI) announced deferral of the domestic implementation of the final Basel III reforms from the first to the second quarter of 2023.
EIOPA recently published a letter in which EC is informing the European Parliament and Council that it could not adopt the set of draft regulatory technical standards for disclosures under the Sustainable Finance Disclosure Regulation (SFDR) within the stipulated three-month period, given their length and technical detail.
The Financial Conduct Authority (FCA) published the third in a series of policy statements that set out rules to introduce the UK Investment Firm Prudential Regime (IFPR), which will take effect on January 01, 2022.
The Australian Prudential Regulation Authority (APRA) published, along with a summary of its response to the consultation feedback, an information paper that summarizes the finalized capital framework that is in line with the internationally agreed Basel III requirements for banks.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) issued a consultative report focusing on access to central counterparty (CCP) clearing and client-position portability.