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BANKS: INPUT SOUGHT ON PROPOSED MINIMUM FLAC DENOMINATION
- 07 October 2025
- Financial Sector
- SA Legal Academy
The Prudential Authority has called for input by 17 November 2025 on a draft determination making R1m (one million rands) the prescribed minimum denomination for a bank’s financial loss absorbing capacity (FLAC) instrument. It is envisaged that the proposed determination should be effective from 1 January 2026.
According to a 6 May 2025 article penned by Edward Nathan Sonnenberg’s (ENS’) Jodie Muller and Deborah Carmichael:
- in December 2023, the Prudential Authority released a draft standard on FLAC instrument requirements for designated institutions that, once finalised, would require them and their holding companies to issue an additional form of capital to:
- ensure a ‘reduced reliance on public funds when banks fail’, and
- ‘empower the resolution authority (concerned) to assign losses to shareholders and creditors in resolution’, and that
- in December 2024 the final standard was published, setting out ‘the principles and requirements for FLAC instruments’.
This is noting that FLAC instruments are designed enable banks to withstand financial distress without relying on government bailouts.
- draft determination
- comments template
- December 2024 FLAC standard
- ENS article
Published by SA Legal Academy Policy Watch
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