Financial Crime World

Tunisia’s Banking Sector Makes Progress in Compliance with International Standards

The Bank of Tunisia (BCT) has achieved significant strides in recent years in implementing international banking standards, as revealed by a new report.

Implementing International Banking Standards

The BCT has established various information bureaus to provide credit institutions with access to valuable data. These include:

  • A risk bureau
  • Balance sheet bureau
  • Non-performing loans (NPLs) bureau

These bureaus will provide detailed information on total NPLs by debtor and classification according to prudential regulations.

Annual Financial Statements

The BCT requires banks to submit annual financial statements, which are reviewed by external auditors. The report highlights that while most credit institutions publish their annual financial statements, the quality of the information on:

  • Risk exposure
  • Internal controls
  • NPLs could be improved.

Supervisory Process

The BCT is working to improve its supervisory process, with external auditors playing a significant role in monitoring banks’ financial statements and internal controls. The report notes that while most credit institutions have two external auditors, none of them audit public banks.

Resolution Framework for Problem Banks

The report highlights the need for a resolution framework for problem banks, as currently, there is no system in place to identify struggling banks and provide a basis for taking corrective measures.

Deposit Guarantee Scheme

Despite Article 41 of Law 2001-65 requiring all banks to belong to a deposit guarantee scheme, the BCT has not yet established such a mechanism. The report notes that the BCT is waiting until the recapitalization of recently privatized banks is complete before introducing the scheme.

Compliance with International Standards

According to Table 1, more than half of the core principles have been assessed as “compliant” or “largely compliant”, and none are marked “non-compliant”. However, there are still areas for improvement, including:

  • Credit and provisioning policy (Principles 7 and 8)
  • Consolidated supervision (Principle 20)
  • Remedial measures (Principle 22)
  • Supervision of foreign banks (Principle 25)

The report notes that the implementation of a BCT circular on internal controls will help address some of these issues.

Conclusion

Overall, the report concludes that while Tunisia has made significant progress in implementing international banking standards, there is still work to be done to achieve full compliance.