Tunisia’s Banking Sector: A Shift Towards Strengthened Regulation and Supervision
In its quest to bolster the stability of the banking sector, Tunisia has implemented a series of reforms aimed at enhancing risk management, supervision, and governance.
Strengthening Anti-Money Laundering (AML) Risk Management Framework
In 2014, the Central Bank of Tunisia (CBT) introduced an AML risk management framework to combat financial crimes and protect the integrity of the banking system.
Implementing a Specific Framework for Banks in Difficulty
In response to the global financial crisis, Tunisia implemented a specific framework for banks facing difficulties between 2012-2015, ensuring the stability of the financial system.
Revision of Sanction System and Establishment of Bank Recapitalization Fund
The CBT revised its sanction system and established a bank recapitalization fund to address the risks posed by distressed institutions.
Basel III Implementation in Tunisia
Tunisia is gradually adopting Basel III standards, with key deadlines including:
- Definition of Equity (2023)
- Calculation of Risk-Weighted Assets for credit risk (2023)
- Revised operational risk framework (2023)
Capital Requirements and Countercyclical Capital Buffer
Banks have a sufficient countercyclical capital buffer, thanks to measures taken by the CBT.
Leverage Ratio and SIB/G-SIB Requirements
The CBT is working on defining an action plan for implementing the leverage ratio, while SIB/G-SIB requirements are not applicable in Tunisia.
Internal Rate Risk in Banking Book (IRRBB) and Liquidity Management
A project to address IRRBB is underway, with a focus on developing Asset-Liability Management (ALM).
Net Stable Funding Ratio (NSFR) and Liquidity Coverage Ratio (LCR)
The CBT introduced the LTD ratio as a transitional ratio before moving to the NSFR. The LCR was introduced in 2014.
Large Exposure and Disclosure
The ratio for large exposure currently in force is set at 25% of net equity, while key metrics such as CAR, Tier 1 capital composition, and IRRBB will be disclosed once the CBT’s program of reforms is complete.
Conclusion
In conclusion, Tunisia’s banking sector has made significant strides towards strengthening regulation and supervision. The CBT’s efforts to implement Basel III standards, enhance risk management, and improve governance are expected to bolster the stability and resilience of the financial system.