Stabilisation Fund for Sustainable Financial Institutions: Objectives and Governance
Explore the objectives, key features, and governance structure of the Stabilisation Fund aimed at enhancing the sustainability of troubled financial institutions by providing assistance through grants, loans, and liquidity support, while ensuring transparency, accountability, and independence.
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Presentation Transcript
CFI NATIONAL INDABA 2014 Stabilisation Fund CFI Sector
OUTLINE Background: Establishment of the SF Objectives of the Stabilisation Fund Key Features guiding the Stabilisation Fund Governance of the Stabilisation Fund Risks and Funding Challenges
BACKGROUND: CBDA MANDATE Regulation & Supervision Liquidity Management Capacity Building & Development
BACKGROUND Objective of the Stabilisation Fund Enhance CFI sustainability Provide assistance through grants, loans, liquidity assistance, payouts Audits, financial assessments and pay-outs
OBJECTIVES OF THE SF Protect Depositors Funds Provide troubled CFIs with assistance Grants & loans (e.g. turn around strategies & mergers) Provide troubled CFIs short term liquidity assistance (assist maintain prudential standards)
OBJECTIVES OF THE SF Appoint independent auditors - to report on the position of troubled CFIs Forensic audits in cases of suspected fraud Assist with Liquidation Assist with depositor payout (last resort)
KEY FEATURES OF THE SF Establishment of a SF Committee (SFC) to: Review eligibility & assess each application Deliberate merits of each case & agree on best way forward Request additional information Determine conditions for assistance Composition: CBDA, NT, SARB, Sector Association Rep, CIPC (any other rep as determined by the Board)
KEY FEATURES OF THE SF Transparency Speedy resolution Least cost resolution Remove moral hazard Accountability & Independence
GOVERNANCE OF THE FUND Board as the Accounting Authority is Accountable w.r.t. to the Affairs of this Fund(oversight role) SFC will report to the Board Board decide on the powers of the SFC Delegation of Authority DOA specify thresholds Approval by SFC vs SFC Recommendation to the Board for Approval
GOVERNANCE OF THE FUND Board needs to decide on Board representation on the Fund SFC working onSFC Charter for presentation to the Board: SFC Charter: outline - composition of the SFC, types of assistance, eligibility for assistance, documentation required, conditions for receiving assistance, procedures for meetings etc. Fund will be audited IA & AG based on criteria outlined in the Charter
RISKS & FUNDING CHALLENGES 2 years ago CBDA requested R10m for the SF and in 2012/13 received R1,1 m Funds ring fenced - invested - CPD at SARB (per PFMA) The R10m was based on a cover of 10% of deposits held by the sector Current savings were approx. R170 m (R17m?) Need explicit Government guarantee in case of sector collapse
PROGRESS Committee has met twice Code of Ethics developed and work-shopped. SF Charter developed and send to the Board for approval SF Business case developed and in process SF need to register with NCR DOA developed and approved by the Board Loan and grant agreements finalised
Thank You Victor Botha NACFISA DIRECTOR
