EXTERNAL CREDIT ASSESSMENT: INPUT SOUGHT ON DRAFT DIRECTIVE

EXTERNAL CREDIT ASSESSMENT: INPUT SOUGHT ON DRAFT DIRECTIVE

• 03 July 2023
• Financial Sector
• SA Legal Academy

The Prudential Authority has called for input by 17 July 2023 on approved banking industry external credit rating agency-related obligations.

This is noting that Regulation 23 under the Banks Act, 1990:

• ‘allows banks to choose between the internal ratings-based approach and the standardised approach … (to) calculating regulatory capital requirements for credit risk’, and that
• the standardised approach ‘make(s) extensive use of … ratings issued by external credit assessment institutions for determining the risk weights of exposures and, ultimately, the calculation of a bank’s minimum required regulatory capital’.

Once in force, the new directive will require that banks:

• inform the Prudential Authority of their nominated external credit assessment institutions, and
• map the international scale ratings to specified risk weights in Regulation 23 in the manner prescribed.

Please click the link below for more information:

• draft directive

Published by SA Legal Academy Policy Watch

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