Regulatory Alerts2017-08-30
D3/2017: Assets Lodged or Pledged to Secure Liabilities
The South African Reserve Bank’s Office of the Registrar of Banks issued Directive D3/2017 to specify categories of assets lodged or pledged to secure liabilities that are exempt from deduction against banks’ common equity tier 1 capital and reserve funds. The directive replaces Directive 1 of 2014 and explicitly exempts securities financing transactions, central bank liquidity facilities, eligible credit risk mitigation techniques, central counterparty exposures, non-centrally cleared derivatives, and qualifying securitisation schemes from capital deductions when they comply with prescribed regulations. Banks and controlling companies must ensure these specified transactions fully comply with applicable financial reporting standards and regulations, while continuing to deduct the value of other pledged assets that are unavailable for meeting liabilities under the Banks Act.