Regulatory Alerts2020-08-27
Capital Framework for South Africa Based on the Basel III Framework
The Prudential Authority of the South African Reserve Bank issued Directive D4/2020 to clarify and update the national capital framework, aligning South African banking regulations with Basel III standards. The directive establishes minimum capital ratios for Common Equity Tier 1, Tier 1, and total capital while capping the combined systemic risk and domestic systemically important bank requirements at 3.5 percent of risk-weighted exposures. It mandates public disclosure of domestic systemically important bank capital add-ons, retains discretionary bank-specific internal capital requirements, and enforces capital conservation measures that restrict dividend distributions when ratios fall below prescribed thresholds.
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