Banks to Adopt Basel IV Regulation from 2019

Ebere Nwoji

Banks in Africa, Nigeria banks inclusive, will from January 2019 be expected to adopt the Basel IV regulation, which is expected to place them at par with other global operators.

Currently most banks operating in the region are operating under Basel 111 regulatory model while others in less developed parts of the region are still grappling with Basel 11 model.

In Nigeria, the banks are expected to adhere to the Basel 111 regulation, but information from this year’s edition of the annual Advanced Structured Trade Finance Seminar holding in Da Sal Cape Verde, revealed that by January 2019, banks operating in the region would migrate from the prevailing Basel 111 regulatory model to Basel IV model.

“Basel III is a comprehensive set of reform measures, developed by the Basel Committee on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector.

It aims at improving the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source, improve risk management and governance, strengthen banks’ transparency and disclosures.

One of the speakers at the seminar, Daniel Medina, who spoke on the topic: “Bank Capital Management and Structured Trade Finance under Base 111,” said for African banks to remain relevant in the global money market arena, there is need for regulators to update their regulatory tools to be in tandem with the rest of the world.

He therefore called on banking industry regulators and managers across the region to begin to gird themselves and their work force in preparation for adoption of the new model.

Earlier in his address at the seminar, AFREXIM Bank’s President, Dr. Benedict Oramah, had emphasised on the need for the regional banks to adapt their operations to global changes instead of remaining static and rigid.

“For instance, rising costs of compliance is beginning to constrain access of many African economies to import financing.
“A cocktail of enhanced regulatory compliance requirements and the emerging Basel IV and IFRS 9 are likely to further worsen the situation.

“What all these mean is that bankers doing business in Africa have to be adaptive and responsive to the needs of the continent and the evolving operating environment.

“It is no longer possible to operate as if things are not changing. While Africa pioneered FINTECH, the speed of its evolution is creating challenges and opportunities for trade finance banks around the world,” he stated.