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College of Supervisors of the West African Monetary Zone (CSWAMZ)

Introduction


The CSWAMZ was established with the purpose of providing a common platform for regulators from the WAMZ countries to come together to discuss how to oversee individual and cross border financial institutions in the Zone. By coming together in a structured way, supervisors are able to learn from each other and develop best practice on supervision across national boundaries. The Charter establishing the College was ratified by the Committee of Governors of the WAMZ on 31 July, 2010. On 7 February 2019, the CSWAMZ Charter was revised to reflect the dynamic developments in the banking sectors of the WAMZ.


Objectives

The main objectives of the CSWAMZ include: to facilitate the exchange of information, views and assessments among supervisors in order to allow for a more efficient and effective consolidated and solo supervision and timely action; enable supervisors to develop a common understanding of the risk profile of the group as the starting point for risk based supervision at both group and solo levels; achieve coordination of supervisory review and risk assessment, establishing supervisory plans, arranging any division of tasks and joint onsite visits, thus avoiding duplication of work and reducing the regulatory burden; coordinate decisions taken by individual authorities; contribute to a consistent implementation of WAMZ directives and to the convergence of Member States supervisory practices across the WAMZ; facilitate the implementation/operationalization of the memorandum of understanding between and among various supervisory authorities within the WAMZ; reduce regulatory duplication and inconsistency improve subsequent bilateral dialogue between regulators, increase levels of trust and enhance the cooperation of supervisors.

Working Procedures

Membership of the College consists of the Directors of Banking Supervision of the Member States of the WAMZ. The Chairman of the College is usually rotated in line with the chairmanship arrangement under the WAMZ.

The Secretariat of the College is domiciled with WAMI, specifically FID. The Secretariat prepares and maintains the minutes of the proceedings of meetings of the College and assists the College in its functions and carry out any other duties that may be assigned to it from time to time. Also, the Secretariat in consultation with the Chairman prepares and distributes a Notice and Agenda for each meeting to all College Members.

The CSWAMZ meets every quarter. It meets on the basis of the supervisory framework developed for each offshore entity using the risk based supervisory methodology. The meetings of the College are in line with the schedule of meetings of WAMZ and such other periods as the College may determine. At the meetings of the College, member countries make presentations on the following: developments in the banking sector in a given quarter; the manner in which the parents/subsidiary institution is being supervised on a consolidated basis; the level of oversight of the parent/subsidiary bank on the offshore entities; issues of material supervisory concerns, if any; the enterprise risk management framework and practices in place at the parent/subsidiary bank and the direction of the risks; the level of compliance of the parent/subsidiary bank with the corporate governance principles; recent development and reforms in the home/host banking system, among others.

Activities of the College

The College since inception had organised 38th Meetings. The last meeting was organised virtually due to the exigences of the COVID-19 Pandemic in February 2021. The main issues covered over the period include:

  1. Cooperation and collaboration of Member States in terms of information and knowledge sharing;
  2. Joint examination of Nigerian bank subsidiaries under the principles of consolidated supervision and home-host relationship;
  3. Implementation of Risk Based Supervision (RBS), Basel II & III, and International Financial Reporting Standard (IFRS);
  4. Signing of bilateral memoranda of understanding (MoUs) with Commission Bancaire;
  5. Automation of banking supervision processes - implementation of e-FASS/V-RegCoSS;
  6. Discussions and study on declining correspondent banking relationships in the Zone;
  7. Publication of financial stability reports for the Zone;
  8. Development of Model Act for Banks and Financial Holding Companies in the WAMZ;
  9. Continuous update on developments in Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT);
  10. Study on Banking Crisis Resolution Framework in the WAMZ;
  11. Organisation of High-Level Seminar on various topics including, Banking sector Consolidation, cryptocurrency and Cyber-security in the Financial Services Industry, IFRS 19, macroprudential regulation;
  12. Held Virtual meeting on “COVID-19 Pandemic - Implication for Banking Supervision in the WAMZ”; and
  13. Capacity building efforts for staff of central banks.

 

Achievement of the College

Major achievements of the College during the period included:

  1. Revision of the CSWAMZ Charter;
  2. significant efforts at ensuring a safe and stable financial system in the Zone through effective cooperation and exchange of information, joint supervision of cross-border banks and supervisory colleges;
  3. Continuous conduct of joint examinations of Nigerian bank subsidiaries as well as bank-specific supervisory colleges over the period which has improved cross-border supervision and strengthen home-host relationship;
  4. Publication of various editions of the Financial Stability Report for the Zone.
  5. organised a Webinar on COVID-19 Pandemic - Implication for Banking Supervision in the WAMZ;
  6. Implementation of Basel II, and aspects of Basel III in two Member States, and enhancement of the risk management frameworks in preparation for migration Basel II/III in the other Member States;
  7. Successful implementation of IFRS 9 in Five (5) Member States; and IFRS 16 in Two (2) Member States;
  8. Continuous strengthening of AML/CFT regimes in line with international standards in Member States;
  9. Development and adoption of a Model Act for Banks and Financial Holding Companies in the WAMZ and continuous monitoring to ensure compliance by Member States;
  10. Continuous monitoring of the compliance status of Member States with the 16 selected international standards, including the adoption of the Model Act for Banks and Financial Holding Companies in the WAMZ;
  11. Finalisation of the Study on “Declining Correspondent Banking Relationships in the Zone” and a review of the crisis resolution framework of the WAMZ;
  12. Automation of banking supervision processes in Member States;
  13. Collaborated with the West African Institute of Financial and Economic Management to successfully organise the foundation, intermediate and advance-level banking supervision courses for staff of Member Central Banks and the high-level seminars on crypto currency and banking sector consolidation for CSWAMZ Members.
  14. Implementation of Risk Based Supervision (RBS) in all Member States;
  15. Establishment of an Expert Committee to harmonise and develop a model RBS framework for the Zone.

 

Supervisory Concerns

The following are some of the supervisory concerns of the College:

  1. Non-performing loans remain a threat to financial system stability in the WAMZ;
  2. COVID-19 pandemic presents a threat to financial stability;
  3. Fiscal dominance crowding out the private sector;
  4. High lending rates in most Member States;
  5. Rising trend of cyber risk and data integrity concerns due to the increasing usage of digital and electronic payments and remote working platforms;
  6. Absence of deposit insurance schemes in some jurisdictions in the Zone;
  7. Non-existence of a unique identifier (bank verification number) in most jurisdictions, to help with proper profiling of banks’ customers; and
  8. Deposits and loans concentration risks in some Member States.

 

Way Forward - CSWAMZ

The Secretariat (department) would continue to monitor implementation of sanctioned programmes by the Committee of Governors (CoG), and the compliance level of Member States central banks with respect to the Basel Core Principles, model Act for Banks and Financial Holding Companies and the selected international standards relevant for the integration of the Zone. Specifically, the Secretariat would, among other things, concentrate on the following outstanding activities:

  1. Coordinate and seek funding for the establishment of Unique Bank Identifier in Member States;
  2. Collaborate with WAIFEM to organise a High-Level Seminar and Executive training for senior bank examiners on regulation of groups and Basel II/III, respectively;
  3. Ensure that the Expert Committee working to harmonise and develop a model RBS framework for the Zone complete its work;
  4. Establish of an Expert Committees to develop frameworks on Basel II/III, crisis resolution, and cybersecurity for the Zone;