The Bank of Namibia has made significant progress towards the implementation of Basel III Capital Adequacy Standards in Namibia.
Basel III is a comprehensive set of reform measures, developed by the Basel Committee on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector.
BoN Deputy Director of Corporate Communications, Kazembire Zemburuka, told the Windhoek Observer that the central bank has already issued a circular to all banking institutions outlining the roadmap towards the implementation process.
“This includes the training of its staff members, sensitising the banks and the drafting of the required regulations for the implementation of the new capital requirements.”
The central bank is currently busy with the consultative process with affected stakeholders and will soon re-engage them on the revised timelines for the full implementation of all related activities, Zemburuka said.
Basel III is expected to strengthen the supervision, regulation and risk management practices of the banking sector. “The aim is to improve the sector’s ability to absorb shocks, improve risk management and governance, and strengthen overall transparency and disclosure.”
Zemburuka said the Bank of Namibia believes that doing so will benefit the industry in that financial stability will be advanced and entrenched.
“Ultimately, the consumers will be better off as they will be protected and their deposits safeguarded through effective management processes.”
The central bank has already implemented Basel I and Basel II.
Zemburuka said previous reforms helped the central bank’s supervisory functions in relation to capital measurements for credit, market and operational risks.
“This has helped to foster a world-class banking system with very robust regulations that is acclaimed globally for its soundness and stability. The impact of the introduction of Basel Standards has ensured that the banking sector remains robust to date.”
He said the Basel reforms are considered to have severe impact on economies and societies, if the soundness and stability of such banks are put in jeopardy.
“Therefore, the bank emphasises that the full implementation of the Basel Framework will continue to promote the soundness and resilience of Namibia’s banking sector.”
Namibia’s top three banks are generally well capitalised. Bank Windhoek has a risk-based capital adequacy ratio of 16,6 percent, above the minimum regulatory capital requirement of 10 percent, while FNB has a capital adequacy ratio of 17,2 percent.
Although Standard Bank Namibia capital adequacy ratio stands at 11,69 percent, the bank says it’s in a good position to meet the progressively higher requirements arising from Bank of Namibia’s intent to implement Basel III capital standards in the near future.