Mauritius Banks Must Enhance Compliance and Risk Management to Mitigate Country Exposures
Strengthening the Financial Sector
In an effort to strengthen the country’s financial sector, regulators in Mauritius have introduced guidelines for banks operating in the island nation to adopt robust compliance and risk management frameworks for managing country exposures. The new regulations require banks to establish a framework for identifying, measuring, and managing country risks, while also ensuring that their systems are commensurate with the size, nature, and complexity of their cross-border operations.
Responsibilities of Bank Boards
According to the guidelines, the board of directors of each bank is ultimately responsible for ensuring effective and efficient country risk management. Banks must conduct thorough assessments of the risks associated with individual country exposures and evaluate country conditions to determine the appropriate limits for such exposures.
Factors to Consider
The guidelines outline a minimum set of factors that banks must consider when determining country exposure, including:
- Economic indicators
- Political stability
- Regulatory environment
Monitoring Compliance and Establishing a Comprehensive Program
Banks are required to establish a structure for monitoring compliance with country exposure limits and sub-limits, as well as a comprehensive monitoring program that covers all aspects of country exposures. This includes:
- A framework for identifying, measuring, and managing country risks
- A system for reflecting the impact of country risk on balance sheets
- Regular disclosures about country risk management policies and controls
Disclosure Requirements
In line with international best practices, the guidelines require banks to disclose qualitative and quantitative data on their country exposures in their annual reports. This will provide transparency and help market participants understand the nature and extent of their exposures.
Public Disclosure of Information
The Bank’s Guideline on Public Disclosure of Information will serve as a framework for such disclosures. Banks are expected to provide regular updates on their country risk management policies and controls, ensuring that stakeholders have access to relevant information.