Regulatory Alerts2010-12-15
Interpretation and Application of Criteria for Exposures Secured by Residential Mortgage Bonds
The South African Reserve Bank’s Registrar of Banks has issued Circular 6/2010 to standardize the regulatory criteria for exposures secured by residential mortgage bonds. The circular clarifies that “individual” encompasses legal persons with personal surety, defines exposure as the combined on- and off-balance sheet amounts after credit conversion factors, and mandates that mortgage loans be treated as mortgage exposures. These standardized criteria assign a 35 percent risk weight to loan-to-value ratios at or below eighty percent and seventy-five percent otherwise, with immediate implementation required for all reporting banks.
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