Basel Committee finds South Africa largely compliant with its Net Stable Funding Ratio standard and compliant with its large exposures framework

The BIS published two assessment reports on South Africa’s compliance with global standards set by the Basel Committee on Banking Supervision. The reports reveal that South Africa’s regulations on the NSFR and Basel LEX framework are largely compliant and compliant, respectively. These publications are part of the Committee’s RCAP, which aims to ensure regulatory consistency among member jurisdictions.
On the one hand, the Regulatory Consistency Assessment Programme (RCAP): Assessment of Basel Committee’s Net Stable Funding Ratio standard – South Africa report assesses the implementation of the NSFR standard in South Africa. The assessment team focused on the completeness and consistency of the South African regulations with the Basel NSFR standard and relied on information provided by the Prudential Authority within the South African Reserve Bank. The NSFR was implemented in South Africa via amended regulations relating to banks and the issuance of Directive 8/2017, and it applies to all banking entities in South Africa effective as of 1 January 2018. As of 31 January 2023, the NSFR regulations in South Africa are assessed as largely compliant with the Basel NSFR standard, with a grade of one notch below the highest level. Three of the four components of the Basel NSFR standard are compliant, while the remaining component is largely compliant. The report contains one observation concerning the required stable funding component of the standard. Overall, the assessment team finds the implementation of the NSFR in South Africa to be largely compliant with the Basel standard, based on the materiality assessment summarized in Annex 4.
On the other hand, the Regulatory Consistency Assessment Programme (RCAP): Assessment of Basel Committee’s large exposures framework – South Africa report evaluates the adoption of the Basel LEX framework in South Africa. The assessment was based on information provided by the PA within the SARB and comprised a self-assessment by the PA, an assessment phase, and a review phase. As of 31 January 2023, the large exposures regulations in South Africa are assessed as compliant with the Basel LEX framework. All three components of the framework are also assessed as compliant, with one non-material deviation identified relating to the scope and definitions. The report contains observations relating to each component of the framework, and the Assessment Team finds the implementation of the LEX framework in South Africa to be compliant with the Basel standard based on the materiality assessment.
The Basel Committee’s assessment reports confirm South Africa’s compliance with the NSFR and LEX global standards, demonstrating the country’s commitment to ensuring regulatory consistency in its banking supervision system.
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Figure 1: Summary of member assessments – Overview of jurisdictional assessments