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    SARB Proposes Implementation Dates for Certain Basel III Regulations

    November 25, 2019

    SARB published a guidance note (6/2019) on the proposed implementation dates in respect of certain regulatory reforms under Basel III. The guidance note has been issued to all banks, controlling companies, branches of foreign institutions, and auditors of banks or controlling companies. Based on, among others, industry comments, quantitative impact studies, and progress by the BCBS member jurisdictions to implement the reforms and matters related to implementation complexity, the Prudential Authority is proposing to implement the outstanding regulatory reforms in South Africa on the dates set out in the guidance notes.

    On May 03, 2019, the Prudential Authority proposed a directive related to the second set in a series of proposed amendments to the Regulations relating to Banks. The second set in the series of proposed amendments incorporates the following BCBS frameworks for implementation:

    • The standardized approach for measuring counterparty credit risk exposures (SA-CCR)
    • A capital standard for bank exposures to central counterparties (CCPs)
    • Capital requirements for banks’ equity investments in funds

    Based on the comments and proposal received and the outcome of the subsequent discussions held, it has been decided to revise the proposed implementation dates in South Africa for specified regulatory reforms as follows:

    • Capital Requirements for Equity Investments in Funds
    • Capital Requirements for Bank Exposures to CCPs
    • SA-CCR

    October 01, 2020

    Interest Rate Risk in the Banking Book (IRRBB)

    June 01, 2022

    • Minimum Capital Requirements for Market Risk
    • Revised Standardized Approach for Credit Risk Framework
    • Revised Internal Ratings Based Approach Framework
    • Revised Credit Valuation Adjustment Framework
    • Revised Operational Risk Framework
    • Leverage Ratio—Revised Exposure Definition

    January 01, 2023

    Output Floor

    January 01, 2022: 50%

    January 01, 2023: 55%

    January 01, 2024: 60%

    January 01, 2025: 65%

    January 01, 2026: 70%

    January 01, 2027: 72.5%

    • Revisions to the Securitization Framework
    • Total Loss Absorbing Capacity Holdings
    • Large Exposures Framework

    January 01, 2021

     

    Amendments to Regulations are promulgated by Minister of Finance in terms of Section 90 of the Banks Act 1990, for implementation, only when the National Treasury and the Minister of Finance, at a minimum, have concluded their own respective processes related to, for example, the consideration of any relevant proposed amendments to legislation. Additionally, amendments to the regulations are promulgated, for implementation, when the National Treasury and the Minister of Finance are satisfied that a sufficiently robust consultation process has been followed in respect of the said proposed amendments to legislation.

     

    Related Link: Guidance Note

    Keywords: Middle East and Africa, South Africa, Banking, Capital Requirements, SA-CCR, Basel III, Implementation Dates, Market Risk, Credit Risk, IRRBB, Large Exposures, Output Floor, BCBS, SARB

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