Banking Sector Data (SARB)

Basel III addresses systemic risks through capital quality, risk coverage, and additional buffers.

This data is released by the SARB: Banking Sector Information.

Pillar 1: Minimum Regulatory Capital

Pillar 1, relating to the determination of the minimum required regulatory capital in respect of credit, market and operational risk, including the application and approval processes that were followed in respect of credit and operational risk, where banks targeted approaches other than the base approaches, the quantitative impact studies, field tests and parallel runs, and the recognition of eligible external credit assessment institutions.

  • Credit Risk: The risk of loss from a borrower failing to repay a loan or meet contractual obligations. Banks must maintain sufficient capital to cover potential losses from their lending activities.
  • Market Risk: The risk of losses in on- and off-balance sheet positions arising from movements in market prices. This includes risks associated with trading activities and holdings in securities.
  • Operational Risk: The risk of loss resulting from inadequate or failed internal processes, people, and systems, or from external events.

The key ratios under this pillar are the Common Equity Tier 1 (CET1) Capital Ratio, Tier 1 Capital Ratio, and Total Capital Ratio. These ratios ensure that banks have enough capital to withstand financial stress and absorb losses.

Pillar 2: Capital Management

Pillar 2, relating to capital management, including the initial internal capital adequacy assessment process (ICAAP) assessments and the updating of the supervisory review and evaluation process (SREP).

  • Banks are required to implement a robust process for assessing their overall capital adequacy in relation to their risk profile and a strategy for maintaining their capital levels (Internal Capital Adequacy Assessment Process or ICAAP).
  • SARB reviews and evaluates how well banks assess their capital needs relative to their risks (Supervisory Review and Evaluation Process or SREP). This includes assessing the quality of the bank’s risk management and control processes, and the ability to withstand various stress scenarios.

Pillar 3: Market Discipline

Pillar 3, relating to market discipline, which included industry training.

  • Banks are obliged to publish detailed information about their financial condition, risk exposure, risk assessment methodologies, and capital adequacy. This transparency helps market participants assess the risk profile of banks and the adequacy of their capital buffers.
  • SARB ensures that the disclosures made by banks are in line with the regulatory requirements and provides market participants with the information needed to make informed decisions.