Press release on regulatory relief measures and guidance to the banking sector in response to COVID-19
6 April 2020
The impact of the coronavirus disease 2019 (COVID-19) is likely to have a lasting and detrimental effect on the economy. While the depth and length of the economic downturn remain uncertain, there is already evidence of stress at both the household and business levels, with small businesses of particular concern.
South Africa has a strong and resilient banking system with adequate levels of capital and significant liquidity buffers to manage this stress. The Basel framework, around which bank regulations are structured, has built-in buffers on both the capital and liquidity elements of the regulation for banks to draw on during times of financial stress.
The Prudential Authority (PA) welcomes the measures taken by banks to support their customers during this period of economic turmoil and uncertainty. A safe, sound and robust banking system is a key part of South Africa’s shock absorbers during these times.
In addition to the actions taken by the South African Reserve Bank (SARB) on deploying monetary policy tools to mitigate the impact of COVID-19, the PA has decided to support the banking system in response to the needs of banking customers. The PA will provide for regulatory relief measures as well as guidance to banks in managing the crisis. The regulatory relief measures are provided for in three areas, namely capital relief on restructured loans that were in good standing before the COVID-19 crisis, a lower liquidity coverage ratio (LCR) and lower capital requirements.