Regulatory Alerts2021-05-20
Capital Framework for South Africa Based on the Basel III Framework
The Prudential Authority of the South African Reserve Bank has issued Directive 5/2021 to update and clarify the national capital framework aligned with Basel III. The directive reinstates the Pillar 2A systemic risk requirement, caps its combined total with Domestic Systemically Important Bank (D-SIB) add-ons at 3.5 percent of risk-weighted exposures, and details phase-in schedules for Common Equity Tier 1, Tier 1, and total capital ratios. It further mandates specific disclosure practices for bank-specific individual capital requirements while enforcing capital conservation measures to restrict discretionary payments when ratios fall below prescribed minima.
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