Regulatory Alerts2014-02-18
Guidance Note 4/2014: Application Process for Adopting the Internal Ratings-Based Approach for Banking Book Credit Risk
The South African Reserve Bank’s Registrar of Banks mandates that all banks, controlling companies, and foreign branches obtain prior written approval to adopt the foundation or advanced internal ratings-based approaches for calculating regulatory capital against banking book credit risk. Applicants must submit a comprehensive application pack detailing governance frameworks, rating systems, stress testing, data management, and independent validation, alongside formal declarations signed by the chief executive officer and board chairperson. The supervisory review spans up to eighteen months and requires a mandatory six-month parallel reporting run to validate model accuracy and regulatory reporting capabilities before final approval is granted.