SARB proposes new reporting rules for securitisation vehicles
The South African Reserve Bank (SARB) has issued a proposed Directive (BA501) on securitisation vehicles, updating reporting requirements for issuer special purpose institutions (SPIs). Banks and other interested parties are invited to submit comments by April 13, 2026.
Enhanced reporting and auditor verification
The proposed Directive BA501 mandates issuer special purpose institutions (SPIs) to submit specific information to the Prudential Authority (PA) via the Umoja system on a half-yearly basis, based on a calendar year (end-June and end-December).
SPIs with different year-ends must submit an additional form BA 501. The Directive also requires a certified declaration from an independent SPI director or trustee, and where applicable, the Chief Financial Officer of the bank.
Furthermore, the appointed auditor of the issuer SPI must include the verification of form BA 501 in their annual auditing process.
The primary classification categories for reporting purposes include portfolio credit impairments (stage 1 and 2), specific credit impairments (stage 3), and defaulted exposures, aligning with IFRS 9 staging or alternative classifications for non-IFRS 9 users.
Aligning with global standards and past lessons
The proposed Directive aims to enhance the Prudential Authority's (PA) monitoring of risks from securitisation schemes, a necessity highlighted by the 2007–08 global financial crisis.
The GFC revealed insufficient transparency regarding underlying asset performance and risk concentrations, prompting the need for additional risk information.
Over the years, credit and liquidity risk assessment has evolved, with IAS 39 replaced by IFRS 9 and IFRS 7. Regulatory requirements have also been enhanced, aligned with Basel III post-crisis reforms.
The updated form BA 501, to be completed by issuer SPIs, aligns with these latest standards for better analysis.
This Directive is intended to replace Directive 4 of 2017.
Closing gaps, raising demands
This directive aims to enhance securitisation transparency, addressing vulnerabilities from the 2007-08 crisis.
Aligning reporting with IFRS 9 and Basel III is crucial, but new audit requirements will increase compliance costs for issuer SPIs.
Its success hinges on effective implementation and improved risk monitoring by the Prudential Authority.