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International Monetary Fund. Monetary and Capital Markets Department
This paper focuses on the technical note on regulation and supervision of less significant institutions in Belgium. The financial sector assessment program (FSAP) undertook a targeted review of Belgium’s Less Significant Institutions (LSI) and third-country branches (TCBs) banking regulation and supervision. The National Bank of Belgium (NBB) and Financial Services and Markets Authority have well-established processes for prudential, product and conduct supervision of LSIs. While NBB’s overall supervisory approach is adequate, the regulatory framework for corporate governance could be enhanced. Internal decision-making processes and the underpinning of certain decision proposal could in some specific instances be enhanced. With regard to NBB’s internal supervisory processes, some fine-tuning and continued attention could be useful. The NBB should continue to ensure adequate staffing for LSI and TCB supervision and continue to carefully consider how to address any supervisory Information Technology risk concerns. Banks’ internal capital target could usefully be added to the NBB’s internal monitoring. A structured approach for conduct risk and consumer protection information sharing with the FSMA and the Ministry of Economic Affairs should be put in place.
International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper provides an overview of the challenges facing the banking sector in Libya and puts forward reforms to strengthen financial stability and accelerate credit growth. Priority reforms are identified using the 2012 sound principles for effective supervision, issued by the Basel Committee for Banking Supervision (BCBS), while also considering limitations imposed by the country’s fragility and conflict situation. Banks are struggling to develop Islamic finance products. Financial stability mandate and governance architecture should be strengthened. Financial stability mandate and governance are not clearly articulated in the banking law. Comprehensive internal and external reporting systems should be developed to strengthen management facilitate supervision. The paper recommends that the authorities follow a gradual and consultative approach to regulatory reforms and support the development of human capital and systems at the commercial banks and at the Central Bank of Libya.
International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper provides an overview of the challenges facing the banking sector in Libya and puts forward reforms to strengthen financial stability and accelerate credit growth. Priority reforms are identified using the 2012 sound principles for effective supervision, issued by the Basel Committee for Banking Supervision (BCBS), while also considering limitations imposed by the country’s fragility and conflict situation. Banks are struggling to develop Islamic finance products. Financial stability mandate and governance architecture should be strengthened. Financial stability mandate and governance are not clearly articulated in the banking law. Comprehensive internal and external reporting systems should be developed to strengthen management facilitate supervision. The paper recommends that the authorities follow a gradual and consultative approach to regulatory reforms and support the development of human capital and systems at the commercial banks and at the Central Bank of Libya.
International Monetary Fund. Monetary and Capital Markets Department
The BCEAO has conducted a comprehensive reform during the past five years. The regulatory and prudential framework were aligned with international standards and the conditions for supervision have been strengthened, although the efforts must be continued (liquidity ratio/net stable funding ratio and tools for monitoring liquidity, transfers of ownership, acquisitions of holdings, guidelines on nonperforming claims, and anti-money laundering and combating the financing of terrorism—AML-CFT). The transition to Basel III has made it possible to incorporate additional capital requirements, while the rules applicable to credit institutions were upgraded with the 2017 publication of four circulars on governance, risk management, internal supervision, and compliance.
International Monetary Fund. Monetary and Capital Markets Department
This paper presents Republic of Kazakhstan’s Technical Assistance (TA) report on risk-based supervision recovery plans and interest rate risk. The mission provided recommendations and training to the Agency on the assessment of banks’ recovery plans and interest rate risk in the banking book (IRRBB). The Agency continues to make progress on aligning its prudential regulatory and supervisory frameworks with international standards. The two missions in September 2020 and November 2020 focused on strengthening the Agency’s institutional set up, and on the implementation of certain elements of the Pillar 2 requirements of the Basel Framework. This mission recommended the Agency develop comprehensive regulatory requirements for banks’ recovery plans. The new framework should provide standards that comply with international standards and reflect proportional application to Kazakhstan banks’ systemic risk profile. A short-term follow-up TA can be considered to ensure consistency of the revised regulations with international standards. The mission included six training sessions for supervisors on IRRBB and recovery plans.
Abdullah Al-Hassan, Imen Benmohamed, Aidyn Bibolov, Giovanni Ugazio, and Ms. Tian Zhang
The Gulf Cooperation Council region faced a significant economic toll from the COVID-19 pandemic and oil price shocks in 2020. Policymakers responded to the pandemic with decisive and broad measures to support households and businesses and mitigate the long-term impact on the economy. Financial vulnerabilities have been generally contained, reflecting ongoing policy support and the rebound in economic activity and oil prices, as well as banks entering the COVID-19 crisis with strong capital, liquidity, and profitability. The banking systems remained well-capitalized, but profitability and asset quality were adversely affected. Ongoing COVID-19 policy support could also obscure deterioration in asset quality. Policymakers need to continue to strike a balance between supporting recovery and mitigating risks to financial stability, including ensuring that banks’ buffers are adequate to withstand prolonged pandemic and withdrawal of COVID-related policy support measures. Addressing data gaps would help policymakers to further assess vulnerabilities and mitigate sectoral risks.