Highlights of the report involve five key messages:
- Financial-sector regulators and market commentators are again, as in previous years, questioning the appropriateness of banking institutions’ incentive schemes.
- The turmoil caused by the sub-prime mortgage market was a major development in financial markets during 2007. The Department requested a selection of South African banks to provide detailed reports on their exposure to the prevailing risks. The findings were that South African banks were not impacted directly, but indirect effects were observable.
- The Department, in close co-operation with the Financial Intelligence Centre, continued to monitor banking institutions’ compliance with anti-money laundering and the combating of the financing of terrorism (AML/CFT) legislation. Furthermore, the Department prepared for the Financial Action Task Force on Money Laundering’s (FATF) planned mutual evaluation of South Africa in 2008.
- The process followed in implementing Basel II was a major exercise undertaken over several years. Prior to taking the decision to implement Basel II, the Department considered a range of preconditions that would facilitate the process. This process was characterised by its broad consultative approach; several quantitative impact studies and field tests; amendments to the regulatory and supervisory frameworks; and regular interaction with all South African banking institutions, since Basel II was to be implemented by all banks on 1 January 2008.
- In 2007 regulatory approval was granted for the acquisition of a material shareholding in one of South Africa’s largest banking groups namely, Standard Bank Group Limited (the SBG), a bank controlling company, by Industrial and Commercial Bank of China (ICBC).
Other releases include:
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