CAPE TOWN: The South African Reserve Bank has set aside about R66bn in a facility to help banks liquidity requirements. The Reserve Bank’s liquidity facility will help supplement South African banks in case they have shortfalls.
Following the 2008-09 financial crisis, the international Basel Committee on Banking Supervision developed the “liquidity coverage ratio” to ensure banks had enough unencumbered, high-quality liquid assets to survive a 30-day stress scenario. The Bank’s R66bn facility will provide coverage when local banks have limited high-quality liquid assets.
“The liquidity facilities are designed to allow local banks to meet Basel 3 rules that require financial institutions to hold high-quality liquid assets as a buffer during times of market stress,” the Reserve Bank told Business Day on Thursday.
In its financial stability review released on Thursday, the Reserve Bank said local banks remained sound, adequately capitalized, liquid and profitable, and that capital adequacy ratios were above the minimum 10%. The report said the total capital adequacy ratio was 14.74% in December.
