BANKING INDUSTRY CREDIT RISK MANAGEMENT: DRAFT DIRECTIVE OUT FOR COMMENT

BANKING INDUSTRY CREDIT RISK MANAGEMENT: DRAFT DIRECTIVE OUT FOR COMMENT

• 20 October 2023
• Agriculture, Land Reform & Rural Development
• SA Legal Academy

The Prudential Authority has called for input by 27 November 2023 on a draft directive dealing with the treatment of distressed restructured credit exposures. Informed by consultations in 2022 with industry stakeholders on revising Directive 7/2015, the purpose of the draft directive is to:

• ‘specify minimum requirements relating to the definition and reporting of distressed restructured credit exposures’ and
• clarify the interpretation of Regulation 67 under the Banks Act, 1990, which is aligned to International Financial Reporting Standards.

According to an executive summary of what is proposed, this is noting:

• the importance of consistency among banks when developing and implementing ‘credible categorisation schemes that allow the distinction of credit exposures based on differences in credit quality’, and that
• distressed restructured credit exposures are one category used by the Prudential Authority to ‘monitor the quality of credit exposures on which banks grant various concessions to counterparties experiencing financial difficulties’.

Once finalised and in force, the directive will apply to all banks using the standardised and internal ratings-based approaches to calculating their minimum required capital and reserve funds for credit risk.

• draft directive
• summary of stakeholder comments on the possibility of revising Directive 7/2015
• Directive 7/2015

Published by SA Legal Academy Policy Watch

0 COMMENTS

LEAVE A COMMENT