Bank of Mauritius identifies 5 systemically important banks in Mauritius
As at June 30, 2014, Mauritian banks were required to submit data on five key indicators namely, size; exposure to large groups; interconnectedness; complexity and substitutability; and other sub-indicators, based on which MCB, SBM, Barclays Bank, HSBC and AfrAsia have been identified as the systemically important banks in Mauritius. (Image: sbd2050)
The Mauritius Commercial Bank Ltd, SBM Bank (Mauritius) Ltd, Barclays Bank Mauritius Limited, the Hongkong and Shanghai Banking Corporation Limited and AfrAsia Bank Ltd are the five banks that have been identified as systemically important in Mauritius, on the basis of information submitted by the different banks.
As at June 30, 2014, the Banks were required to submit data on five key indicators namely, size; exposure to large groups; interconnectedness; complexity and substitutability; and other sub-indicators.
Based on their systemic importance, these banks are now required to hold a surcharge ranging from 1.0 per cent to 2.5 per cent of their risk weighted assets.
This surcharge will be applicable as from January 01, 2016 and will be implemented in a phased manner over a four year period where banks are expected to comply fully with the capital surcharge by January 01, 2019.
The Basel Committee on Banking Supervision framework for dealing with Domestic–Systemically Important Banks (D-SIBs) was released in October 2012.
The framework recommended that the systemic importance of banks should be measured in terms of the impact that a bank’s failure could have on the domestic economy.
The framework which is a principles-based approach that provides national authorities with some flexibility through the inclusion of country-specific factors in the determination of the systemic importance of their banks.
In June 2014, the Bank issued the Guideline for Dealing with Domestic-Systemically Important Banks which sets out the methodology to be applied for assessing the systemic importance of banks and the ensuing capital surcharge to be maintained by them.
As per the methodology, banks whose Segment A (domestic) assets represent at least 3.5 per cent of Gross Domestic Product were considered for the assessment.
Finally, the score of each bank will be calculated based on the June figures for each year so as to identify banks which are systemically important.