Regulatory Alerts2020-04-06
D2/2020: Temporary Capital Relief for Banks Amid the COVID-19 Pandemic
The Prudential Authority issued Directive 2/2020 to temporarily reduce the Pillar 2A minimum capital requirement for South African banks to zero, enabling them to sustain credit provision and absorb pandemic-related economic shocks. Banks may draw down against their existing capital conservation buffer while facing restrictions on discretionary distributions, such as dividends and executive bonuses, to preserve capital adequacy. Institutions must individually consult the Authority when utilizing the buffer, apply adjusted capital calculations to large exposure limits, and anticipate a phased reinstatement of the original Pillar 2A requirement following the stress period.
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