## CROSS-BORDER BANKING AND REGULATORY REFORMS: IMPLICATIONS FOR AFRICA FROM INTERNATIONAL EXPERIENCE

## Source details

**Canonical URL:** [CROSS-BORDER BANKING AND REGULATORY REFORMS: IMPLICATIONS FOR AFRICA FROM INTERNATIONAL EXPERIENCE](https://www.imf.org/-/media/files/news/seminars/cross-border-banking-agenda-mauritius.pdf)

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### Conference overview
- Event: JOINT IMF/BCBS/MAKING FINANCE WORK FOR AFRICA CONFERENCE, held at the IMF Africa Training Institute, Mauritius.
- Dates: FEBRUARY 1-2, 2017.
- Purpose (as stated by the conference): To provide African authorities an opportunity to discuss the implications of the experience in Europe during the global financial crisis; to take stock of progress in fostering cross-border cooperation in Africa; and to chart future efforts to strengthen supervision and resolution plans for Pan-African banks.
- Format: Opening and Mme. Lagarde’s keynote address on record; the remainder of the conference conducted under the Chatham House rule to enhance frank dialogue on prudential oversight arrangements.

### Key themes and issues addressed
- Cross-border banking is "an increasingly important feature of the African financial landscape."
- Pan-African banks: "have become systemically important in a number of jurisdictions, in some cases replacing the role of traditional European banks."
- Net implications: Expansion of Pan-African banks brings benefits for host economies but "also challenges that require a significant upgrade of supervisory oversight and cross-border cooperation frameworks in order to manage potential spillover risks."
- Context: Global regulatory reforms are advancing while "concerns on supervisory capacity constraints in Africa persist" and "a need for more voice for African concerns in international fora."

### Session I — Cross-Border Supervisory Cooperation in Africa (February 1, 14:40–16:10)
- Objectives: Take stock of progress and elicit authorities’ views on key challenges and the state of cooperation with other supervisors, including home supervisors of international banks operating in Africa.
- Identified gaps and scope for improvement:
  - "data availability;"
  - "harmonization of regulatory and supervisory practices;"
  - "frequency of joint inspections;"
  - "senior representation in supervisory colleges;"
  - "preparation of contingency plans for handling emergency situations."
- Questions for authorities posed by the conference:
  - Views on challenges and state of cooperation with other host supervisors and home supervisors of international banks’ subsidiaries.
  - Views on regional representation in supervisory colleges for global banks.
  - Views on establishing "crisis management groups and resolution plans for each Pan-African banking group."

### Session II — Private Sector Perspectives on Pan-African Banking (February 1, 16:25–17:55)
- Focus: Private sector views on Africa’s financial market potential, comparative bank strategies on cross-border operations and expansion, and dialogue on regulatory and prudential oversight frameworks.
- Observations on Pan-African bank business models and potential contributions:
  - Operate "with very different models of home versus cross-border operations, expansion strategy, and business orientation."
  - May "bring advantages not only in promoting innovation and providing a wide array of services, but also in having better local information and thus being able to assess risks more accurately."
  - Post-global financial crisis role: "contributed to cushion the effect of deleveraging of European banks by taking a lead role in leading syndicated financing for infrastructure development."
- Private sector incentives for stronger prudential frameworks:
  - May "strategically support a strengthening of prudential frameworks aimed at mitigating cross-border contagion, despite the costs involved in ensuring adequate capital and liquidity buffers."
  - Likely to support "the harmonization of regulatory and supervisory frameworks across the continents, to reduce the costs involved in having to deal with multiple reporting requirements."
  - May advocate "a more leveled playing field on fiscal incentives enjoyed by some competitors, and higher standards in the conduct of supervisory activities."

### Session III — International and European Experience on Regulation, Supervision, and Resolution (February 2, 10:00–11:15)
- Rationale: The European experience from the global financial crisis demonstrated the need for effective cross-border cooperation and resolution arrangements.
- Key lesson: Resolving cross-border financial institutions involved "ad hoc costly interventions, and tensions related to different national priorities," and preserving financial stability required "moving toward a supranational approach."
- Session agenda elements:
  - Review the case for, the roadmap toward, and the experience to date on a common supervision and resolution framework involving home and host authorities.
  - Discuss international best practices on supervisory frameworks for bank-holding companies, a key issue for Pan-African banking.
  - Highlight "lessons on implementation challenges in limited capacity settings prevailing in Africa."
- Deliverable emphasis: Present results of a study of international best practices and legal and supervisory frameworks for bank-holding companies, and develop proposals for Pan-African banks that take into account operational and institutional constraints.

### Session IV — Key Takeaways and Road Ahead for Oversight of Pan-African Banks (February 2, 11:45–13:00)
- Purpose: Take stock of the dialogue and place lessons from Europe in the larger context of efforts to safeguard financial stability and foster sustained growth in Africa.
- Priority recommendation emerging from the session: "to strengthen consolidated supervision and cross-border cooperation in Africa, and recommend that these efforts be actively pursued under the aegis of the Association of African Central Banks."

### Schedule highlights (selected exact times and events)
- February 1, 2017:
  - 13:30–13:45: Welcome, Governor Rameswurlall Basant Roi, Bank of Mauritius
  - 13:45–14:15: Keynote Address: "Cross-Border Banking in Africa: Framing the Policy Issues" — IMF Managing Director, Mme. Christine Lagarde (public with press)
  - 14:15–14:40: Coffee Break
  - 14:40–16:10: Session I
  - 16:10–16:25: Questions and Answers
  - 16:25–17:55: Session II
  - 17:55–18:10: Questions and Answers
  - 19:30: Reception/Dinner Hosted by Effie Psalida, Director of ATI; Welcoming remarks by IMF Managing Director, Mme. Christine Lagarde
- February 2, 2017:
  - 9:00–9:30: Keynote Address: "Resolving Cross-Border Banks—Lessons from the Nordic and European Banking Crises" — Mr. Stefan Ingves, Chairman of the Basel Committee on Banking Supervision, and Governor of the Sveriges Riksbank
  - 9:30–9:45: Discussant: Mr. Kuben Naidoo, Deputy Governor, SARB
  - 9:45–10:00: Questions and Answers
  - 10:00–11:15: Session III
  - 11:15–11:30: Questions and Answers
  - 11:30–11:45: Coffee Break
  - 11:45–13:00: Session IV
  - 13:00–13:15: Questions and Answers
  - 13:15: Concluding Lunch

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_Source: https://www.imf.org/-/media/files/news/seminars/cross-border-banking-agenda-mauritius.pdf_