Regulatory Alerts2014-02-14
Interpretation and Application of Criteria Relating to Exposures Secured by Residential Mortgage Bonds
The South African Reserve Bank’s Registrar of Banks issued Circular 4/2014 to resolve inconsistencies in how banks calculate capital and report exposures secured by residential mortgage bonds. The circular clarifies that regulation 23(8)(c) defines exposure as the sum of on- and off-balance sheet amounts after applying credit conversion factors, while recognizing personal surety as valid for full mortgage bond security. It further standardizes risk weight classifications by loan-to-value ratios and retail portfolio criteria to ensure uniform regulatory reporting.
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