Mauritius: Technical Assistance Report-Strengthening Bank Resolution and Crisis Management Framework

IMF Staff Country Reports, June 13, 2018

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The report discusses measures needed to strengthen bank resolution and crisis management framework in Mauritius.
The current legal framework in Mauritius does not provide the supervisor with adequate triggers and powers to mitigate risks at a sufficiently early stage.
The law should provide for a broader range of corrective tools that allow the supervisor to restore weak banks to sound financial conditions.
A new resolution framework is needed to effectively manage failing banks, safeguard financial stability as well as limit moral hazard.
Formal plans describing how the resolution authority will manage the failure of individual banks and their groups need to be developed.

Broaden legal triggers and supervisory powers to enable earlier and more effective intervention.
Provide supervisors with a broader range of corrective tools to restore weak banks to sound financial conditions.
Establish a new resolution framework to manage failing banks, safeguard financial stability, and limit moral hazard.
Develop formal resolution plans for individual banks and banking groups clarifying how the resolution authority will manage failures.

Insufficient statutory triggers and powers for the supervisor to act at an early stage.
Limited range of corrective tools under current law to rehabilitate weak banks.
Absence of a formalized resolution framework to guide the orderly management of failing banks.
Lack of formal resolution plans for individual banks and groups.

Legal reforms to expand supervisory triggers and powers.
Design and enactment of a resolution framework with clear objectives of financial stability protection and moral hazard mitigation.
Preparation of formal, bank-specific and group-specific resolution plans by the resolution authority.
Coordination among financial authorities and clarity on roles and responsibilities in crisis management.

Subjects: Bank liquidation, Bank resolution, Bank resolution framework, Banking, Crisis management, Financial crises, Legal support in revenue administration, Revenue administration
Keywords: authority, bank, Bank liquidation, Bank resolution, Bank resolution framework, BoM Board, BoM subsidiary, CR, Crisis management, financial authorities, financial condition, Global, government's authority, government's responsibility, home authorities, home authorities' resolution plan, home authority, ISCR, Legal support in revenue administration, resolution, resolution plan, terms and conditions