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

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.

    December 22, 2022 WebPage Regulatory News

    FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates

    The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.

    December 20, 2022 WebPage Regulatory News

    FSB Reports Assess NBFI Sector and Progress on LIBOR Transition

    The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.

    December 20, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8697