Representatives from various sub-Saharan African central banks and supervisory authorities, the Basel Committee on Banking Supervision (BCBS) and the Financial Stability Institute (FSI) of the Bank for International Settlements (BIS) met in Cape Town for a High-level Meeting, hosted by the South African Reserve Bank (SARB).
In his keynote address, SARB Deputy Governor Francois Groepe embraced the need to constantly strengthen and enhance our regulatory platforms and discussed some of the challenges sub-Saharan Africa faces in implementing regulatory reforms. He mentioned the de-risking activities of many internationally active banks, especially with regard to correspondent banking. Correspondent banks’ adjusted business models are aimed at a de-risking of activities, a reduction of reputational risk and the management of stronger regulation, especially with regard to combating money laundering and the financing of terrorism. Moreover, a revision of risk-return assessments is taking place, and in a specific session on this issue, participants discussed how global regulators are specifically addressing this particular challenge for many African jurisdictions.
Basel III agreement
Mr William Coen, Secretary General of the BCBS, presented the final Basel III agreement, emphasising that the Committee will sharpen its focus on helping to ensure the full, timely and consistent implementation of the new standards. He outlined the current activities of the BCBS, including the careful monitoring of the impact of the new framework. Dr Andreas Dombret, Member of the Board of the Deutsche Bundesbank, confirmed in his keynote address that the finalisation of Basel III was an important step for global banking regulation. Most importantly, the focus could now shift towards implementation. He highlighted the need for a proper and consistent implementation of the reforms for internationally active banks while accepting the principle of “proportionality” for smaller and less sophisticated banks, a key current consideration in Europe.
Other regulatory and supervisory issues
Meeting participants also touched upon other regulatory and supervisory issues pertinent to the region such as the implementation of the expected credit loss provisioning framework. This led to a lively discussion about the challenges for regulators and institutions associated with this new framework. Participants also discussed the main supervisory challenges facing the region. The reduction in the number of correspondent banking relationships was emphasised as a major risk for the adequate functioning of the financial system and for the objective of achieving further financial deepening and inclusion. Issues relating to cross-border banking, non-performing loans, the role of state-owned banks, consolidation of the banking industry and the need to increase capacity-building at supervisory agencies were actively discussed during the meeting.
In his concluding remarks, Mr Restoy stressed that, with the finalisation of Basel III and the post-crisis regulatory reforms nearing completion, the international regulatory community was now focusing its efforts on effective implementation. That entailed striking the right balance between recognising the specialities of the banking sector in different jurisdictions and preventing regulatory fragmentation given that the latter could jeopardise the objectives of the international reform effort. In this context, he emphasised the importance of a frank exchange of views and experiences among supervisors to ensure proper implementation of the new rules around the world.
Representatives
The event was co-chaired by Mr Kuben Naidoo, Deputy Governor and Registrar of Banks, SARB, Mr William Coen, Secretary General, BCBS, and Mr Fernando Restoy, Chairman, FSI. The countries, regional central banks and institutions represented were: Angola, the Commission Bancaire de l’Afrique Centrale (COBAC) representing Cameroon, Congo, Equatorial Guinea, Central African Republic, Chad and Gabon; the Union Monétaire Ouest Africaine (UMOA) representing Benin, Burkina Faso, Cote d’Ivoire, Guinee-Bissau, Mali, Niger, Senegal, Togo; the West African Institute for Financial and Economic Management (WAIFEM); Botswana, Kenya, Lesotho, Malawi, the Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI), Mozambique, Namibia, Nigeria, Seychelles, South Africa, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe, Deutsche Bundesbank, the European Banking Authority, the Institute of International Finance and the Financial Services Volunteer Corps.
Source: https://www.bis.org/
