Contents
IMF Country Report No. 15/55
March 2015
This Detailed Assessment of Compliance on the Basel Core Principles for Effective Banking Supervision on South Africa was prepared by a staff team of the International Monetary Fund. It is based on the information available at the time it was completed in February 2015.
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Contents
SOUTH AFRICA
FINANCIAL SECTOR ASSESSMENT PROGRAM
BASEL CORE PRINCIPLES FOR EFFECTIVE BANKING SUPERVISION DETAILED ASSESSMENT OF COMPLIANCE
February 2015
Prepared By
Monetary and Capital Markets Department
This Detailed Assessment Report was prepared in the context of an IMF Financial Sector Assessment Program (FSAP) mission in South Africa during May 2014, led by Cheng Hoon Lim, IMF and overseen by the Monetary and Capital Markets Department, IMF. Further information on the FSAP program can be found at
Contents
Glossary
INTRODUCTION
BACKGROUND INFORMATION AND METHODOLOGY
INSTITUTIONAL AND MARKET STRUCTURE—OVERVIEW
A. Institutional Framework for Regulation and Supervision
B. Overview of the Banking Sector
PRECONDITIONS FOR EFFECTIVE BANKING SUPERVISION
A. Macroeconomic Environment
B. Frameworks for Financial Stability Oversight, Crisis Management, and Systemic Protection
C. Infrastructures for the Financial Sector
DETAILED ASSESSMENT
RECOMMENDED ACTIONS AND AUTHORITIES COMMENTS
A. Recommended Actions
B. Authorities’ Response to the Assessment
BOX
1. The 2012 Revised Core Principles
FIGURES
1. Financial Assets in South Africa
2. Shares of Banking Assets
TABLES
1. Supervisory Powers, Responsibilities, and Functions
2. Prudential Regulations and Requirements
3. Summary Compliance with the Basel Core Principles
4. Recommended Actions to Improve Compliance with the Basel Core Principles and the Effectiveness of Regulatory and Supervisory Frameworks
Glossary
| AASB | Auditing and Assurance Standards Board |
| AC | Additional criteria |
| ALM | Asset liability management |
| AMA | Advanced measurement approach (operational risk) |
| AML | Anti-money laundering |
| BA or Banks Act | Banks Act 1990 (Act No. 94 of 1990, as amended) |
| BCBS | Basel Committee on Banking Supervision |
| BCP | Basel Core Principles |
| BIS | Bank for International Settlements |
| BSD | Bank Supervision Department of the SAR |
| CDD | Customer due diligence |
| CEO | Chief executive officer |
| CET1 | Common equity tier 1 |
| CFT | Counter-terrorist financing |
| CLF | Committed liquidity facility |
| CP | Core Principle |
| EC | Essential criteria |
| ESAAMLG | Eastern and Southern Africa Anti-Money Laundering Group |
| FATF | Financial Action Task Force |
| FIC | Financial Intelligence Centre |
| FICA | Financial Intelligence Centre Act (Act No. 38 of 2001) |
| FIU | Financial Intelligence Unit |
| FMS | Financial management system |
| FSAP | Financial Sector Assessment Program |
| FSB | Financial Services Board |
| FSCF | Financial Sector Contingency Forum |
| FSOC | Financial Stability Oversight Committee |
| FSR | Financial Stability Review |
| FX | Foreign exchange |
| IAASB | International Auditing and Assurance Board |
| GFC | Global financial crisis |
| IAS | International Accounting Standard |
| IASB | International Accounting Standard Board |
| ICAAP | Internal capital adequacy assessment process |
| IFRS | International Financial Reporting Standards |
| IMA | Internal models approach (market risk) |
| IMF | International Monetary Fund |
| IRB | Internal ratings-based approach (credit risk) |
| IRBA | Independent Regulatory Board for Auditors |
| IRRBB | Interest rate risk in the banking book |
| ISA | International Standards on Auditing |
| JSE | Johannesburg Stock Exchange |
| KYC | Know your customer |
| LCR | Liquidity coverage ratio |
| LGD | Loss given default (IRB credit risk approaches) |
| ManCo | Management committee (of the BSD) |
| MIR | Management information report |
| MIS | Management information system |
| MOU | Memorandum of understanding |
| NCA | National Credit Act |
| NCR | National Credit Register |
| NPL | Non-performing loan |
| NSFR | Net stable funding ratio |
| OFA or Oracle | Oracle Financial Analyser (software used for data analysis) |
| OR | Operational risk |
| ORS | Operational Risk Subcommittee (of the FSCF) |
| OTC | Over-the-counter |
| PD | Probability of default (IRB credit risk approaches) |
| PEP | Politically exposed persons |
| PIIGS | Portugal, Ireland, Italy, Greece and Spain |
| POCA | Prevention of Organised Crime Act (Act No. 121 of 1998) |
| PRA | Prudential Regulatory Authority (in the United Kingdom) |
| QIS | Quantitative Impact Study (conducted by the BCBS) |
| Registrar | Registrar of Banks |
| Regulation(s) | Regulations relating to banks |
| RoE | Return on equity |
| RSF | Required amount of stable funding |
| SAICA | South African Institute of Chartered Accountants |
| SAMOS | South African Multiple Option Settlement |
| SARB | South African Reserve Bank |
| SARBA | South African Reserve Bank Act |
| SENS | Stock Exchange News Service (operated by the Johannesburg Securities Exchange) |
| SREP | Supervisory Review and Evaluation Process/Programme |
| STA | The standardized approach |
| Strate | South Africa’s Central Securities Depository |
| SVaR | Stress value at risk |
| VaR | Value at risk |
| ZAR | South African Rand |