## HIGH-LEVEL SUMMARY TECHNICAL ASSISTANCE REPORT — CURAÇAO AND SINT MAARTEN: Report on the Financial Soundness Indicators (June 2023)

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**Canonical URL:** [HIGH-LEVEL SUMMARY TECHNICAL ASSISTANCE REPORT — CURAÇAO AND SINT MAARTEN: Report on the Financial Soundness Indicators (June 2023)](https://www.imf.org/-/media/files/publications/hls/2023/english/hlsea2023005.pdf)

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### Background and Mission Scope
- The International Monetary Fund’s (IMF’s) Statistics Department (STA) provided technical assistance (TA) to the Centrale Bank van Curaçao en Sint Maarten (CBCS) during April 25–May 9, 2022.
- Mission objectives:
  - Review the institutional framework for collection and dissemination of FSIs data for Curaçao and Sint Maarten.
  - Examine source data, institutional coverage, and accounting and regulatory frameworks used in compiling FSIs for deposit takers (DTs).
  - Assist CBCS in compiling FSIs for DTs in line with the IMF’s 2019 FSIs Compilation Guide (2019 FSIs Guide), separately for Curaçao and Sint Maarten, with the aim of reporting to STA for dissemination.
  - Prepare accompanying metadata for posting on the IMF’s FSI website.
  - Assess data availability to compile FSIs for other financial corporations (OFCs).
  - Address other FSIs compilation and reporting issues raised by CBCS staff.
- Prior practice: CBCS compiled FSIs for its financial stability assessment but had not reported them to STA for dissemination. CBCS previously compiled 13 core and six additional FSIs for commercial banks and two FSIs for Real Estate Markets (REMs) at the monetary union level that were not always aligned with the 2019 FSIs Guide.

### Summary of Findings
- Source data and accounting framework:
  - Source data for compiling FSIs for commercial banks are adequate and generally meet the requirements of the 2019 FSIs Guide.
  - Financial statements prepared in accordance with the CBCS’s 2016 Chart of Accounts Manual (COAs), broadly consistent with IAS/IFRS.
  - Valuation of financial instruments follows partially IFRS 9; provisioning rules are prescribed using the supervisory method.
- Regulatory and supervisory frameworks:
  - Regulatory framework for capital adequacy ratios broadly consistent with the Basel II framework, covering credit, market, and operational risks.
  - Minimum capital adequacy ratio: 10.5 percent for commercial banks and 8 percent for offshore banks.
  - Compared to Basel II, higher risk weights are assigned to some exposure categories to reflect local credit risk; these are documented in the draft metadata.
  - Definitions of nonperforming loans, liquid assets, and short-term liabilities are broadly consistent with the 2019 FSIs Guide.
- Compilation tools and automation:
  - Bridge tables were developed for commercial banks and savings banks to map income and expense statements, balance sheets, and supervisory series to the FSI Standard Reports (FSI-SRs).
  - Bridge tables can be linked with CBCS’s database to automate FSIs compilation and facilitate adoption of new report forms.
- Institutional coverage and reporting bases recommended:
  - For Curaçao: compile and report FSIs using Cross Border, Cross Sector Domestically Incorporated Consolidation Basis (CBCSDI).
    - Coverage: four commercial banks and one saving bank domestically incorporated and controlled, and one subsidiary of a foreign-controlled bank, plus their foreign deposit-taking subsidiaries and branches in Sint Maarten, Aruba, and the Dutch Caribbean.
  - For Sint Maarten: compile and report FSIs using Domestic Location Consolidation Basis (DL).
    - Coverage: one subsidiary and three branches of banks incorporated in Curaçao, and one subsidiary and one branch of foreign-controlled banks.
- Data collection improvements identified (medium term):
  - Collect granular data on accrued interest receivable/payable at the level of financial instruments and counterparts.
  - Compile data disaggregated by residents of Curaçao and Sint Maarten for loans in the call reports.
- Metadata and institutional coverage templates:
  - Mission worked on FSM (metadata) and FSIC (institutional coverage) templates to explain national compilation practices and deviations from the 2019 FSIs Guide.
  - FSM publication will provide additional information on national accounting and regulatory frameworks underpinning FSI production.
  - FSIC will provide the structure of the banking sector, including presence of any DTs in liquidation excluded from FSI coverage.
- Outputs and reporting readiness:
  - CBCS is able to start reporting FSI-SRs, FSM, and FSIC for dissemination on the IMF’s FSI website for Curaçao and Sint Maarten.
  - Legal and institutional framework for collecting and publishing aggregate FSI data are adequate for reporting FSIs and metadata to STA.
  - Compiled series as a result of the mission:
    - For Curaçao: 14 core and ten additional FSIs for DTs and two additional FSIs on REMs on a quarterly basis, and two additional FSIs on the size of OFC’s subsector on an annual basis.
    - For Sint Maarten: eight core and seven additional FSIs for DTs and two additional FSIs on REMs on a quarterly basis.
  - Recommendation to compile separate FSIs for offshore banks in Curaçao and for the Monetary Union of Curaçao and Sint Maarten (monetary union accounts) consistent with the 2019 FSIs Guide and report to the WHD country team quarterly for Fund surveillance and macro-prudential analysis.
  - Following the mission, authorities started reporting FSI data for Curaçao and Sint Maarten separately in IMF’s FSI reporting template using the bridge tables from 2018 onwards and finalized FSM and FSIC report forms for STA review prior to publication.

### Summary of Recommendations and Action Plan (Priority items)
- An action plan with priority recommendations and target dates was prepared. Key priority recommendations include:
  - September 2022 (Completed):
    - Start compiling FSIs for DTs separately for Curaçao and Sint Maarten using bridge tables developed during the mission, consistent with the 2019 FSIs Guide, and link the bridge tables with the internal database to partially automate the compilation of FSIs from June 2018 onwards. — Responsible: CBCS
  - September 2022 (Completed):
    - Finalize and report to STA for review the FSI-SRs for DTs, including balance sheets, income statements, and memorandum series, the new FSIC and FSM report forms for Curaçao and Sint Maarten separately with information from June 2018 onwards. — Responsible: CBCS
  - October 2022:
    - Start regular reporting to STA (on a quarterly basis) FSI-SRs, FSIC, and FSM for Curaçao and Sint Maarten separately through the Integrated Collection System (ICS) for disseminating on the IMF’s FSIs website with data from June 2018 onwards. — Responsible: CBCS

*Prepared by Brian Kwok Chung Yee and Bidisha Das; High-Level Summary Technical Assistance Report — Curaçao and Sint Maarten: Report on the Financial Soundness Indicators (June 2023).*

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_Source: https://www.imf.org/-/media/files/publications/hls/2023/english/hlsea2023005.pdf_