SA REGULATION
We were helping the regulator understand what
sort of returns could be developed so that banks
could submit information that is relevant to the
regulations that were being proposed.
‘Since 2008 we have gone through a journey where we basically
managed the implementation of the Basel regulations through
a collaborative approach, facilitating the implementation and
discussions between The Banking Association, the South African
Reserve Bank, National Treasury and the audit and accounting
professions,’ says Brits.
‘We were helping the regulator understand what sort of returns
could be developed so that banks could submit information that is
relevant to the regulations that were being proposed,’ he says. Brits
says The Banking Association has and continues to have frank and
constructive talks with the regulators on banking matters.
‘We respect the fact that the responsibility of regulators is to
regulate, so our engagement has been very fruitful and we try at
every opportunity to understand the subtleties of the application
of rules versus the academic view of the regulatory framework of
banking,’ Brits says.
He says the major challenge has been to find a balance
between adopting the global banking regulations – since South
Africa is a member of the G20 – and ensuring that they are
applicable to local conditions.
‘Because Basel III is a global framework borne out of the banking
failures in North America and Europe, it does not necessarily sit
easily in South Africa; we have had to try to talk with our bankers
to find ways of implementing it and see how we can meet the
requirements without, for example, passing on the costs to the
consumer or creating more administrative problems,’ Brits explains.
He says that the biggest challenge in implementing global
regulations is to get a sense of what the economic impact will be
on a country like South Africa. He notes that the banking sector
is already over-regulated, having to deal with up to 244 pieces of
different financial and non-financial regulations.
‘For the next few years we will be challenged with regulations,
and I think at some point we will have to stop and assess whether
the regulations have impeded economic recovery or have slowed
down the transformation agenda of the country,’ Brits says.
‘There might be a very painful and long-winded process to get
equilibrium globally as everyone seems to be focusing on ensuring
that banks do not fail,’ says Brits. ‘But we are not yet sure whether
the costs associated with these joint efforts (of regulating the
banking sector) can be justified in the long run,’ he asserts.
Brits argues that the face of banking has forever changed,
and banks and regulators will have to continue to adapt to new
regulations, new ways of doing business and the competitive
environment.
Despite the onerous regulatory environment brought about
mainly as a result of the last credit crisis, Brits says there are useful
lessons from what happened in 2008/09.
‘The lessons learnt from Europe cannot be ignored because they
are real and it was a tangible crisis. We therefore need to learn from
these lessons and take appropriate measures, even though we still
have the problem of different countries having a different framework
of (national) regulations,’ Brits says. By Sure Kamhunga
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