Banks Act, 1990 (Act No. 94 of 1990)RegulationsRegulations relating to BanksChapter II : Financial, Risk-based and other related Returns and Instructions, Directives and Interpretations relating to the completion thereof36. Consolidated supervision: consolidated returnMatters relating to consolidated supervision including directives and interpretations for completion of quarterly consolidated return (Form BA 600)Subregulation (15) and (16) |
| (15) | Matters specifically related to connected lending or lending to a related person |
| (a) | In order to prevent any potential abuse arising from connected lending or lending to a related person, every bank and every controlling company shall have in place robust processes, procedures, systems and board-approved policies that, as a minimum, comply with the relevant requirements specified in regulation 24(9), and such further requirements as may be specified in writing by the Registrar. |
| (16) | Matters specifically related to intragroup transactions or exposure |
| (a) | A bank or controlling company shall have in place robust board-approved policies and risk-management processes and procedures relating to intragroup transactions or exposure, which policies, processes and procedures— |
| (i) | shall duly address matters relating to— |
| (A) | cross-shareholding; |
| (B) | any trading activities in terms of which one entity within the banking group deals with or on behalf of another entity within the banking group; |
| (C) | any central management function in respect of the liquidity structure or requirements within the relevant banking group; |
| (D) | guarantees, loans or commitments provided to or received from any entity within the banking group; |
| (E) | any management or other service arrangement, such as internal audit or back-office services, provided to or received from any entity within the banking group; |
| (F) | any material exposure to a major shareholder of the bank or controlling company, including any guarantee, loan or commitment; |
| (G) | any exposure arising from the placement of funds or assets of clients with any other entity within the banking group; |
| (H) | any purchase or sale of assets between entities within the banking group; |
| (I) | any transfer of risk between entities within the banking group, including any reinsurance; |
| (J) | any relevant risk arising from double or multiple gearing of funds; |
| (ii) | shall ensure that intragroup transactions or exposures are duly documented, reported and accounted for; |
| (iii) | shall ensure that intragroup transactions or exposures are subject to appropriate oversight by the board of directors and senior management of the relevant bank or controlling company; |
| (iv) | shall ensure adequate control in respect of any transfer mechanism adopted within the relevant banking group, including any transfer mechanism relating to— |
| (A) | capital; |
| (B) | funding; |
| (C) | risk; or |
| (D) | income. |
| (v) | shall be sufficiently robust to ensure that— |
| (A) | both sides of bilateral transactions can be analysed and that the relevant bank or controlling company identifies, monitors and controls the nature and extent of the intragroup transaction or exposure; |
| (B) | the board of directors and senior management of the relevant bank or controlling company have an adequate understanding of the incurred risks and any subsequent changes in the said risk profile due to an intragroup transaction or exposure. |
| (b) | When the Registrar is of the opinion that the bank or controlling company's policies, processes, procedures and systems relating to intragroup transactions or exposures are inadequate, the Registrar may— |
| (i) | require the bank or controlling company to deduct from its capital and reserve funds such amount relating to such transactions or exposure as may be specified in writing by the Registrar; |
| (ii) | require the bank or controlling company to obtain adequate collateral in respect of the relevant exposure; |
| (iii) | in addition to any limit specified in the Act specify limits in respect of intragroup transactions or exposures; |
| (iv) | in writing specify such further conditions as the Registrar in the circumstances deems appropriate. |