Proposed Amendments to the Banks Act Regulations Deletion of BA Returns

P O Box 427 Pretoria 0001 South Africa 370 Helen Joseph Street Pretoria 0002 +27 12 313 3911 / 0861 12 7272 www.resbank.co.za 1 Ref.: 15/8/1/3 D4/2024 To: All banks, controlling companies, branches of foreign institutions, eligible institutions and auditors of banks or controlling companies Directive issued in terms of section 6(6) of the Banks Act 94 of 1990 Proposed amendments to the Regulations relating to Banks Executive summary In terms of section 90 of the Banks Act, 1990 (Banks Act), the Minister of Finance (MoF) may make regulations in respect of any matter required or permitted to be prescribed by regulation in terms of the Banks Act. Since the inception of the Banks Act, the respective Banks Act returns (BA returns) and the related instructions for the completion of the BA returns formed an integral part of the Regulations relating to Banks (Regulations), issued in terms of section 90 of the Banks Act. The Financial Sector Regulation Act 9 of 2017 (FSRA) read with the Banks Act makes provision for the Prudential Authority (PA) to issue prudential standards and make determinations for financial institutions in respect of various matters, including matters in respect of which regulations may be prescribed in terms of the Banks Act. To facilitate and support the ongoing work related to the Umoja System Implementation Project, which includes the development and submission of various regulatory returns going forward, including various BA returns, the PA decided, among others, to propose that the BA returns and the related instructions for the completion of the BA returns be deleted from the Regulations. In future all BA returns and the related instructions for the completion of the respective BA returns will be issued in the form of Directives or determinations issued under Prudential Standards. In this regard, on 12 April 2024, the PA issued a proposed Directive accompanied by the relevant required draft Government Notice, inviting all banks, controlling companies, branches of foreign institutions, eligible institutions, auditors of banks or controlling companies and other interested person to submit their comments on the proposed Directive and the accompanying proposed Government Notice to the PA by no later than 24 May 2024. Banks, controlling companies and branches of foreign institutions are hereby directed to note the revised proposed implementation date of 1 January 2025 for the proposed deletion from the Regulations of the BA returns and the related instructions for the completion of the BA returns.

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1. Introduction 1.1 In terms of section 90 of the Banks Act, the MoF may make regulations in respect of any matter required or permitted to be prescribed by regulation in terms of the Banks Act. 1.2 Since the inception of the Banks Act, the respective BA returns to be completed by banks, controlling companies and branches of foreign institutions (hereinafter collectively referred to as ‘banks’), and the related instructions for the completion of the respective BA returns, among others, formed an integral part of the Regulations, issued by the MoF in terms of section 90 of the Banks Act. 1.3 Subsequently, the PA has been established in terms of section 32 of the FSRA, with effect from 1 April 2018. Section 105 of the FSRA read with section 1A(4) of the Banks Act makes provision for the PA to issue prudential standards for financial institutions in respect of various matters, including matters in respect of which regulations may be prescribed in terms of the Banks Act. 1.4 Following the global financial crisis that commenced in 2007, various international standard-setting bodies agreed to put in place, among others, comprehensive measures, policies, regulations, and extensive reforms to promote financial stability as well as the safety and soundness of individual financial institutions. 1.5 In this regard, the Basel Committee on Banking Supervision (BCBS) issued for implementation by member jurisdictions, among others, the Basel III post-crisis reforms. 1.6 As a member of the BCBS, South Africa remains committed to the full, timely and consistent adoption and implementation of all relevant frameworks, standards and requirements issued by the BCBS, including the relevant Basel III post-crisis reforms. 1.7 Due to the timelines associated with the Basel III post-crisis reforms, and to ensure that the regulatory framework in terms of which the PA regulates and supervises banks remains relevant, the PA in consultation with all relevant key stakeholders decided: 1.7.1 To incorporate the Basel III post-crisis reforms into the Regulations, which already contains all the relevant internationally agreed frameworks, standards and requirements issued by the BCBS since the early 1990s. 1.7.2 Once the Basel III post-crisis reforms have been incorporated into the Regulations, the PA will commence with a process to convert the then fully updated set of Regulations into Prudential Standards. 1.7.3 In future, all BA returns, and the related instructions for the completion of the respective BA returns will be issued separately, in the form of Directives or determinations, issued in terms of the Banks Act read with the FSRA, with the necessary enabling provisions to make specific determinations incorporated into the relevant Prudential Standards.

3 1.8 Currently, regulation 6 of the Regulations states, among others: 1.8.1 forms to be completed and submitted in terms of the Regulations can be obtained from the PA, and must be completed and submitted in accordance with the relevant instructions, directives and interpretations contained in the applicable chapters of the Regulations; and 1.8.2 banks are not obliged to use the forms provided by the PA, but any reproduction used by a bank or controlling company must in all respects correspond to the prescribed forms. 1.9 Towards the end of 2023, as an integral part of the Umoja System Implementation Project,1 the Umoja team commenced engaging various key interested persons in respect of the development and submission of the respective regulatory returns, among others. 1.10 On 12 April 2024, the PA issued a proposed Directive2 informing all interested persons that, to facilitate and support the ongoing work related to the Umoja System Implementation Project, the PA decided: 1.10.1 To recommend the deletion from the Regulations of all BA returns and the related instructions for the completion of the respective BA returns. 1.10.2 To propose the simultaneous issuance of all the BA returns and the related instructions for the completion of the respective BA returns in the form of Directives and/ or determinations issued under Prudential Standards in terms of the Banks Act read with the FSRA. 1.11 All interested persons were invited to submit their comments to the PA no later than 24 May 2024. The PA wishes to express its sincere appreciation for the comments subsequently received. 2. Directive 2.1 Based on the aforesaid and in accordance with the provisions of section 6(6) of the Banks Act, all banks and other interested persons are hereby directed to note: 2.1.1 the proposed deletion from the Regulations of all BA returns and the related instructions for the completion of the BA returns, with effect from 1 January 2025, as set out in the proposed Government Notice attached to this Directive as Annexure 1. 2.1.2 that all BA returns and the related instructions for the completion of the respective BA returns will in future be issued by the PA in the form of Directives or determinations issued under Prudential Standards.

1 Umoja is a system development project for a digital interface between the PA and regulated institutions aimed at providing a more integrated, efficient, and transparent operating model. 2 Available online: Proposed Directive - Proposed amendments to Regulations

4 3. Acknowledgement of receipt 3.1 Kindly ensure that a copy of this Directive is made available to your institution’s external auditors. In addition, the attached acknowledgement of receipt, duly completed and signed by both the Chief Executive Officer of the institution and the said auditors, should be returned to the PA at the earliest convenience of the signatories. Fundi Tshazibana Chief Executive Officer Date: Encl.: 1 The previous Directive issued was Directive 3/2024, dated 16 April 2024.