CBT Relaunches Convergence Process, Targets Full Compliance with Basel Standards by 2023

The Central Bank of Tunisia (CBT) has relaunched its convergence process, aiming to complete the implementation of Basel standards by 2023. This move is part of a broader effort to strengthen banking supervision and ensure financial stability in the country.

Key Areas of Focus

The new approach will focus on several key areas:

Definition of default
Staging rules
Provisioning rules on both individual and consolidated bases
Prudential filters at the equity level, designed to ensure that banks maintain adequate capital buffers

International Financial Reporting Standards (IFRS) 9

The CBT has announced plans to apply IFRS 9 on a consolidated basis, with a focus on assessing the impact of non-performing loans (NPLs) coverage on weighted assets and equity. This will help lenders to better manage their risk profiles and improve their overall financial health.

Convergence Process Timeline

The bank’s convergence process is expected to be completed in several stages:

Finalization of the supervision project on a consolidated basis
Publication of a circular defining prudential consolidation scope and methods
Launch of a micro-impact study on IFRS 9

Additional Initiatives

Other areas of focus include:

Adoption of Basel III requirements, which will help to strengthen banking capital adequacy and improve risk management practices
Revision of the capital adequacy circular and reporting requirements
Introduction of new disclosure key metrics

Impact on Financial Stability and Banking Supervision

The relaunch of the convergence process is seen as a major step forward in Tunisia’s efforts to enhance financial stability and strengthen banking supervision. The move is expected to have a positive impact on the country’s economy and help to promote confidence in the banking sector.