Bank Supervision in Algeria Needs Consolidation

Algeria’s banking system has been criticized for lacking effective supervision, with major public banks yet to undergo comprehensive examinations. The country’s financial authorities are urged to take immediate action to strengthen oversight and address weaknesses.

Assessment of Compliance

The International Monetary Fund (IMF) and the World Bank conducted an assessment of Algeria’s compliance with the Basel Core Principles on Effective Banking Supervision in November 1999. While the country has made some progress, significant gaps remain in its regulatory framework.

Need for Consolidation

The report highlights the need for consolidation of bank supervision, including:

• Off-site monitoring
• Limited-scope on-site inspections

The authorities have acknowledged these weaknesses and are working to improve their supervisory capacity with IMF technical assistance.

Prudential Regulations and Requirements

One of the main areas of concern is prudential regulations and requirements, where nine out of ten principles were found to be non-compliant. The Financial Action Task Force (FATF) principles on money laundering also need to be adopted.

Key Findings

Basel Core Principles

• Algeria does not comply with most of the Basel Core Principles in the category of methods of ongoing supervision.
• Additional measures are needed to avoid supervisory forbearance.

Technical Assistance

The authorities have expressed a desire to improve the situation and are already working on an intensive program of technical assistance with IMF experts. This includes:

• Training for on-site personnel
• Identifying necessary information
• Organizing data storage
• Streamlining current organization

Conclusion

The authorities have committed to implementing reforms and improving their supervisory capacity. It remains to be seen whether these efforts will be sufficient to address the significant weaknesses in Algeria’s banking system.