West African Economic and Monetary Union: Financial Sector Assessment Program—Detailed Assessment Report on the Basel Core Principles for Effective Banking Supervision

IMF Staff Country Reports, December 14, 2022

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West African Economic and Monetary Union: Financial Sector Assessment Program—Detailed Assessment Report on the Basel Core Principles for Effective Banking Supervision

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Bibliographic details

• Published: December 14, 2022
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9798400226571.002

Executive summary and main findings

• The BCEAO has conducted a comprehensive reform during the past five years.
• The regulatory and prudential framework were aligned with international standards.
• Conditions for supervision have been strengthened, although efforts must be continued in specific areas:
  • liquidity ratio/net stable funding ratio and tools for monitoring liquidity
  • transfers of ownership
  • acquisitions of holdings
  • guidelines on nonperforming claims
  • anti-money laundering and combating the financing of terrorism—AML-CFT
• The transition to Basel III has made it possible to incorporate additional capital requirements.
• Rules applicable to credit institutions were upgraded with the 2017 publication of four circulars on:
  • governance
  • risk management
  • internal supervision
  • compliance

Analytical themes and supervisory implications

• Alignment with international standards:
  • Regulatory and prudential frameworks have been brought into alignment with international standards through recent reforms.
• Liquidity and funding monitoring:
  • Ongoing work is needed to implement liquidity ratio/net stable funding ratio measures and operational tools for monitoring liquidity across institutions.
• Ownership and market structure:
  • Strengthening oversight of transfers of ownership and acquisitions of holdings to ensure stability and sound governance.
• Credit quality and NPL management:
  • Need for formalized guidelines on nonperforming claims to improve credit risk identification, provisioning, and resolution.
• AML-CFT:
  • Continued enhancement of anti-money laundering and combating the financing of terrorism frameworks is required to meet international expectations.
• Capital adequacy and Basel III transition:
  • Transition to Basel III enabled incorporation of additional capital requirements, reinforcing bank resilience.
• Corporate governance and internal controls:
  • The 2017 circulars reflect upgraded expectations for governance, risk management, internal supervision, and compliance within credit institutions.

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