Pan-African Banking Finding its Stride

IMF News, February 13, 2017

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Rapid expansion of cross-border banking in Africa in the years since the global financial crisis.
African banks headquartered from Morocco to South Africa have each established business operations in at least 10 countries.
Ecobank, headquartered in Togo—is present in more than 30 countries on the continent.
These institutions are occupying a space created by the retreat of several global bank groups from Africa in the wake of the crisis.

The expansion is spurring financial and economic integration and transforming the continent’s financial landscape.
Positive changes facilitated by pan-African banks:
- Providing customers with new and better products and services.
- Operating improved IT and management systems.
- Observing more advanced regulatory and accounting standards.

New challenges for African regulators and supervisors with potential implications for economic and financial stability.
Many of the challenges have been felt worldwide, particularly in Europe, requiring strengthening of banking regulation and tighter oversight.
Specific supervisory needs noted:
- Supervision of bank holding companies on a consolidated basis.
- Involvement of supervisors in countries hosting systemically important bank subsidiaries through attendance at supervisory college meetings and information exchange.
- Coordination among economies at widely varying stages of financial sector development, where bank subsidiaries can be highly systemic to local economies.
Common cross-border issues include data-sharing and cross-border bank resolution, which are not unique to Africa and affect advanced and emerging market economies.

Conference title: Cross-Border Banking and Regulatory Reforms: Implications for Africa from International Experience.
Participation:
- More than 80 officials from Africa and Europe.
- 12 African central bank governors.
- Bank chief executives.
- An IMF team led by Managing Director Christine Lagarde.
- European supervisors led by Stefan Ingves, Governor of the Swedish Central Bank and Chairman of the Basel Committee on Banking Supervision.
Conference themes:
- Supervisory challenges of pan-African banking in detail.
- Need for cooperation among African peers and with international supervisors.
- Lessons from European experience on cross-border bank resolution, particularly Nordic and Baltic countries’ experience during and after the global financial crisis.

Managing Director Christine Lagarde emphasized:
- The key need to ensure that supervision of bank holding companies takes place on a consolidated basis.
- “You face a delicate balancing act,” Lagarde said. “You need to enhance regulation and supervision but, in implementing global standards, you also must take into account local circumstances. Fortunately, you are not alone. The IMF and other bodies recognize the challenges you face and are committed to drawing on our global experience to assist you.”
- “At the end of the day, a strong regulatory and supervisory setting can help ensure that healthy banks are able to provide the lifeblood of Africa’s economic resurgence. This will be a long-term effort, and we will be with you every step of the way,” Lagarde said.
Stefan Ingves highlighted:
- Cross-border bank resolution challenges and lessons from the Nordic and Baltic countries.
- The IMF’s role as a neutral third party that can bring expertise and financial resources: “Besides being able to bring its expertise, let alone its financial muscles, to the table, the Fund often also plays an important role as a neutral third party,” he said.
IMF activities supporting the agenda:
- Providing technical expertise and capacity development.
- Engagement through the Africa Training Institute, the Mauritius-based AFRITAC South regional technical assistance center, and other regional centers.

IMF News — Pan-African Banking Finding its Stride (February 13, 2017); Conference held February 1-2 in Mauritius.

Resolving Cross-Border Banks: Lessons from the Nordic and European Banking Crises
- Resolving Cross-Border Banks: Lessons from the Nordic and European Banking Crises (Markdown version)
- Resolving Cross-Border Banks: Lessons from the Nordic and European Banking Crises (PDF)