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Y D Singh

SIXTH ANNUAL INTERNATIONAL SEMINAR on POLICY CHALLENGES for the FINANCIAL SECTOR CROSS-BORDER SUPERVISORY COOPERATION – ISSUES AND CHALLENGES Washington DC, 9 June 2006. Y D Singh. CROSS-BORDER SUPERVISORY COOPERATION – SOUTH AFRICAN DEVELOPMENTS. AGENDA. Regional cooperation

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Y D Singh

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  1. SIXTH ANNUAL INTERNATIONAL SEMINAR on POLICY CHALLENGES for the FINANCIAL SECTORCROSS-BORDER SUPERVISORY COOPERATION – ISSUES AND CHALLENGESWashington DC, 9 June 2006 Y D Singh

  2. CROSS-BORDER SUPERVISORY COOPERATION – SOUTH AFRICAN DEVELOPMENTS

  3. AGENDA • Regional cooperation • Regional training events • Basel Core Principles • Basel II in the SADC region • Regional issues affecting SA banks implementing Basel II • Information exchange between supervisors • Issues to be discussed at supervisory colleges • SA key milestones achieved so far

  4. Regional Cooperation • East and Southern Africa Banking Supervisors Group (ESAF) • Established 1993 • Dissolved 2004 • SADC Subcommittee of Bank Supervisors (SSBS) • Established 2004 • SSBS members • Angola, Botswana, DRC, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia, Zimbabwe

  5. Regional Training Events • Annual training interventions in conjunction with international bodies such as BIS, IMF and World Bank • Intermediate Course in Bank Supervision • Focus areas • Risk management • Role of key players in the risk management process

  6. Regional Training Events • Heads of Supervision Workshop • Focus areas • Topical events, eg Basel II, problem bank resolution, anti-money laundering etc • FSI Regional Seminars • Focus areas • Topical events, eg Basel II, problem bank resolution, corporate governance etc

  7. Basel Core Principles • Self-assessments • Last regional survey conducted in 2001 • Revised Basel Core Principles • Regional response submitted to BIS • SA completed a gap analysis – May 2006 • Regional self-assessment planned for March 2007

  8. Basel II in the SADC region         

  9. Basel II in the SADC region

  10. Basel II in the SADC region, by 2008?     

  11. Regional issues affecting SA banks implementing Basel II • Areas of national discretion, e.g. • Capital adequacy ratio – 8% vs 10% • Risk weighting of local and other sovereigns • Regulatory reporting requirements • Need for Memoranda of Understanding • Access to / sharing of information • Different disclosure requirements • Application / approval process for advanced approaches • Phased roll-out across banking groups

  12. Information Exchange between Supervisors • Expected that information exchange will mainly take place during bilateral and multilateral discussions and supervisory colleges • Main regional counterparts for SA are Mauritius, Namibia & Swaziland • Information sharing should be flexible and tailored to the particular circumstances/requirements of each party • Regional supervisory colleges planned during 2007

  13. Issues to be discussed at Supervisory Colleges • Significance of entity in home and host jurisdiction • Implication of phased roll-out approach • Basel II implementation timetable • Home vs Host responsibilities • National Discretion exercised • Sharing of information

  14. Issues to be discussed at Supervisory Colleges • Supervisory expectations • Legal and regulatory framework of home and host • Accounting and disclosure regime of home and host • Levels of consolidation required • Communication strategy • Cooperative arrangements

  15. Basel II in SA – Accord Implementation Forum Steering Committee Communication Strategy Task Group Risk Management Sub-Committee Pillar I Regulatory Framework Sub-Committee Disclosure Sub-Committee Pillar III Economic Impact Sub-Committee Operational Risk Task Group Cross-border Task Group Disclosure BA Return Task Group Economic Study Task Group Market Risk Task Group Capital Adequacy Task Group General Education Task Group ALM Task Group Credit Risk Task Group Credit Risk BA Return Task Group Securitisation BA Return Task Group Credit Derivative Task Group

  16. SA Key milestones achieved so far • MOUs with the following countries have been established • Central Bank of Mauritius • Financial Services Commission – Isle of Man • Germany - Barfin • Irish Financial Services Regulatory Authority • Namibia • UK – FSA • MOUs for the following countries are being established • Argentina • Australia - APRA • Dubai • Hong Kong – Hong Monetary Authority • Venezuela • Three supervisory colleges attended, FSA & Netherlands

  17. SA Key milestones achieved so far • Initial readiness assessment conducted - all banks • QIS 4 completed • Banks Amendment Bill being finalised • Proposed amendments to the Regulations • Draft 2 issued • Completion of informal field tests by Banks • Formulated minimum requirements • Credit risk: IRB application-pack • Operational risk: AMA application-pack • On-site visits commenced • QIS 5 study underway Good progress made

  18. Thank you

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