CFI NATIONAL INDABA 2014 Stabilisation Fund CFI Sector

OUTLINE • Background: Establishment of the SF • Objectives of the Stabilisation Fund • Key Features guiding the Stabilisation Fund • Governance of the Stabilisation Fund • Risks and Funding Challenges

BACKGROUND: CBDA MANDATE Regulation & Supervision Liquidity Management Capacity Building & Development

BACKGROUND Objective of the Stabilisation Fund Enhance CFI sustainability Provide assistance through grants, loans, liquidity assistance, payouts Audits, financial assessments and pay-outs

OBJECTIVES OF THE SF • Protect Depositors Funds • Provide troubled CFIs with assistance – • Grants & loans (e. g. turn around strategies & mergers) • Provide troubled CFIs – short term liquidity assistance (assist maintain prudential standards)

OBJECTIVES OF THE SF • Appoint independent auditors - to report on the position of troubled CFIs • Forensic audits in cases of suspected fraud • Assist with Liquidation • Assist with depositor payout (last resort)

KEY FEATURES OF THE SF • Establishment of a SF Committee (SFC) to: • Review eligibility & assess each application • Deliberate merits of each case & agree on best way forward • Request additional information • Determine conditions for assistance • Composition: CBDA, NT, SARB, Sector Association Rep, CIPC (any other rep as determined by the Board)

KEY FEATURES OF THE SF • Transparency • Speedy resolution • Least cost resolution • Remove moral hazard • Accountability & Independence

GOVERNANCE OF THE FUND • Board as the Accounting Authority is Accountable w. r. t. to the Affairs of this Fund(oversight role) • SFC – will report to the Board • Board decide on the powers of the SFC – Delegation of Authority • DOA – specify thresholds – Approval by SFC vs • SFC – Recommendation to the Board for Approval

GOVERNANCE OF THE FUND • Board needs to decide on Board representation on the Fund • SFC working on SFC Charter for presentation to the Board: • SFC Charter: outline - composition of the SFC, types of assistance, eligibility for assistance, documentation required, conditions for receiving assistance, procedures for meetings etc. • Fund will be audited IA & AG based on criteria outlined in the Charter

RISKS & FUNDING CHALLENGES • 2 years ago – CBDA requested R 10 m for the SF and in 2012/13 received R 1, 1 m • Funds ring fenced - invested - CPD at SARB (per PFMA) • The R 10 m was based on a cover of 10% of deposits held by the sector • Current savings were approx. R 170 m (R 17 m? ) • Need explicit Government guarantee in case of sector collapse

PROGRESS • Committee has met twice • Code of Ethics developed and work-shopped. • SF Charter developed and send to the Board for approval • SF Business case developed and in process • SF need to register with NCR • DOA developed and approved by the Board • Loan and grant agreements finalised

Thank You Victor Botha NACFISA DIRECTOR