Minister doubts bank rules

SA’s deputy finance minister has warned against a blanket imposition of additional banking regulations, saying that reforms should take into account dynamics in developing economies.

SA’s Deputy Finance Minister Nhlanhla Nene warned against a blanket imposition of additional banking regulations internationally, saying that reforms which were primarily directed at the developed world should take into account dynamics in developing economies.

Mr Nene — who was addressing a board meeting of the International Banking Federation hosted by the Banking Association of SA in Johannesburg yesterday — said that there was a great need to be “aware of the possibility that standards that are appropriate for advanced economies, may yield different results in emerging economies”.

“Trade finance, which is fundamental to many of these economies, is a sector that is heavily impacted by the enhancements to the risk coverage under Basel 3. Trade finance continues to play an important role in emerging markets, many of which rely heavily on international trade,” he said.

Responding to these concerns, Wim Mijs, the chairman of the International Banking Federation and CEO of Nederlandse Vereniging van Banken, said: “A regulatory framework is necessary but you always have national discretion. The question is at what level is this discretion, because you don’t want to stop growth in developing countries.” He said the meeting in SA was important as it created an opportunity for banking representatives in developing and developed economies to learn about each other’s successes and challenges.

Representatives from other national banking associations talked about the challenges faced by banks in their countries.

Cas Coovadia, MD of the Banking Association of SA, said that South African banks were on track to implement Basel 3, but were concerned about additional buffers in capital requirements.