The new Financial Sector Forum Website

Visit the new Financial Sector Forum Website

The new Financial Sector Forum at http://www.financialsectorforum.com will, in time, consolidate two existing websites: The existing Financial Sector Forum at http://www.finforum.co.za and South Africa: Financial Institutional Structure at http://reservebanksa.blogspot.com (here).
This action was necessitated by a lack of funding,

Posts on the new Financial Sector Forum website include:

• Malfunction of banks can sink global economy
• The National Payment System Framework and Strategy
• Absa: Household mortgage debt
• SA Reserve Bank Quarterly Bulletin
• Nedbank Weekly Economic Monitor
• Absa: SA Morning Sheet – daily economic comment
• Online fraudsters target Rugby World Cup
• Tainted credit records depress house market
• Nedbank: Mining production
• Nedbank: Manufacturing production
• Absa: House price indices
• Nedbank: SA Reserves
• Nedbank Weekly Economic Monitor
• Time to get credit rules roadworthy
• E&Y Financial services index
• Composite business cycle indicators for South Africa
• Absa: Mortgage advances
• Nedbank: Trade data

This site will also link to sister website, The Financial Regulation Forum at http://www.financialregulationforum.com

  PLEASE HELP US TO IMPROVE OUR INFORMATION CONTENT AND CONTINUE THE SERVICE If you found the information on this website useful and if you or your company would like to see it expand please click on DONATE. Thanks on behalf of the Financial Regulation Forum and the Financial Sector Forum - the Editor.

New Basel rules could hurt

Proposed regulations that would force banks to increase their short-term liquidity could have a significant impact on earnings at Absa , says Absa CEO Maria Ramos.

Absa, which is majority owned by Britian’s Barclays, is also considering acquisitions in Namibia, Zambia and Botswana to boost its bank assurance business, the lender’s deputy chief executive told Reuters in the same interview.

Maria Ramos, Deputy Chief Executive Louis von Zeuner and Financial Director David Hodnett met with Reuters following an investor presentation in Johannesburg today.

South African banking system stable

Local banks remained stable in the face of Europe's debt woes and did not need the level of regulatory reform required elsewhere, SA Finance Minister Pravin Gordhan said yesterday.

Gordhan said one challenge facing the G20 meeting was how to return to a co-ordinated effort in grappling with the crisis without undermining global economic growth. The meeting should, however, not prescribe a uniform formula for all countries.

"We believe that though there has to be co-ordination, there doesn't have to be uniformity. South Africa, with Canada, Australia and India to a point have a common belief that our banking systems and financial systems are secure," he said.

"We don't have to impose the same levels of capital liquidity and other forms of strictures on our banking and financial systems as the rest of the world has to." He said South Africa was "a bit concerned that the level of co-ordination initially at the G20 is not the level that we are seeing now".

UK financial regulatory reform supports SA Reserve Bank

George Osborne, Chancellor in the UK conservative-liberal coalition government, announced, on 16 June, the end of the existing, apparently ineffective, tripartite arrangement for financial regulation, implemented over a decade ago, in favour of a twin peaks approach*. The powers of the Bank of England will be significantly increased.

Click to view a presentation which outlines the UK Government’s plans to reform the institutional framework for financial regulation in order to avoid a repeat of the financial crisis.

SA to implement financial services reforms

South Africa will implement financial regulatory reforms in line with G-20 recommendations, including better management of foreign risk exposure of banks and institutional investors, the National Treasury said (see box below).

“As of March 2010, South African banks will be able to acquire direct and indirect foreign exposure of up to 25% of their total liabilities (excluding equity), covering all foreign exposure but excluding FDI (foreign direct investment).

“The initial limit of 40% has been adjusted downwards in light of recent international developments,” the Treasury said in its 2010 Budget Review (chap 2).

It said research was underway to complete the move from rules-based to principles-based regulation of foreign exposure for institutional investors and to finalise the definition of ’foreign asset’ that captures the underlying risks.

Snippet: Exchange rate determination in South Africa

In her first appearance as South African Reserve Bank Governor before Parliament's finance committee, Gill Marcus said, that the Bank would not intervene in the foreign exchange market to keep the rand at a particular level. Marcus made clear that “it is not the Bank’s task or desire to intervene to find a rate we feel comfortable with. We do not do that, and we will not do that”. As mentioned in her first MPC statement earlier this week, Marcus said, however, that issues surrounding the mandate of the Reserve Bank remained open to debate. This follows meetings of the ANC’s National Executive Committee over the weekend in which it expressed the need to review the mandate of the SARB, as well as look at ways of weakening the currency in order to improve the competitiveness of SA’s export sector. According to Governor Marcus, discussions between ANC alliance members, the NEC, the Ministry of Finance and the SARB are likely to take place soon, with the SARB to report back on the discussions sometime in February 2010.