The Mauritanian banking industry comprises of 19 Bankss. 5 of them are local Bankss, 9 are foreign owned subordinates, 1 is a joint venture and 4 are subdivisions of foreign Bankss.
In add-on to traditional banking installations, Mauritanian Bankss besides provide other services. These include card based payment system such as debit and recognition cards, cyberspace banking and phone banking installations. For case, fund disposal ; tutelary services ; trust territory ; structural loaning ; structured trade finance ; international portfolio direction ; investing banking ; private client activities ; and exchequer and specialised finance. The international Bankss, on the other manus, provide an extended scope of planetary banking and fiscal services to corporate, institutional and private clients. Additionally, Islamic banking is besides available in some banking establishments of the state.
The banking industry has witnessed the reaching of new participants over the recent old ages and this expected to make a more competitory banking environment. Soon the industry is dominated by MCB and State Bank with a combined market portion in the scope of 65-70 % . Barclays is besides progressively going a major participant on the domestic industry with an approximate market portion of 15 % based on the loan book.
On the planetary banking concern sphere, HSBC and Barclays take the major portion part. Market incursion in the planetary concern banking is rather hard as the large international Bankss have world-wide links. However, the planetary concern section is an country of concern which local Bankss are embarking onto through an extension of their operations overseas.
In fact, the Mauritius ‘ banking system consists of two subsystems: an onshore and an offshore banking sector. The onshore banking sector histories for approximately two tierces of the assets of the entire onshore fiscal sector. It should be noted that The Banking Act of 2004 removed the differentiation between domestic and seaward Bankss and provided for banking to be conducted under a individual banking licence government. All Bankss are free to carry on concern in any currency.
Exposure of the domestic banking sector
The chief beginning of exposure arises from the construction of the banking system. The extremely concentrated construction of the sector, with two chief Bankss ruling the system, histories for the exposure of the banking sector. In add-on, there is a really high concentration of recognition, with a smattering of pudding stone borrowers holding the possible to wash up the capital base of the banking system. Credit hazard, is hence, the chief hazard confronting the Mauritanian banking system, although the high degrees of capital and net incomes of the system provides a comfy barrier against high chance dazes. The smaller Bankss are unsurprisingly more susceptible to recognition hazards.
There is a proper and efficient regulative model for Bankss in Mauritius. The banking statute law provides for prudential ordinances with regard to Bankss ‘ concentration of hazard, weighted capital adequateness ratio, income acknowledgment and categorization of loans and progresss for purveying intents, care of accounting and other records and internal control systems. The supervisory and licensing organic structure of all Bankss is the Bank of Mauritius which is the Central Bank.A
The supervisory organic structure has in fact endorsed the Basel II Capital Accord and has agreed to the Basel Committee Core Principles for proper and efficient supervising of Bankss. Basel II model is, in fact, an extension of the Basel I paradigm. Basel I set out the minimal capital demands of fiscal establishments with recognition hazard minimisation as its chief end. International Bankss were required to keep a minimal sum of 8 % of their capital base as a per centum of their hazard weighted assets.
The revised Accord, Basel II provide inducements for Bankss to better their recognition hazard direction patterns. The Accord attempts to carry through this by puting up of accurate hazard and capital direction demands designed to guarantee that a bank holds capital militias appropriate to the hazards exposure of Bankss through its loaning and investing patterns. Another cardinal aim of the Accord is the betterment of quantitative hazard measuring and hazard direction across Bankss. Basel II comprises of three pillars ; viz. : minimal capital demands, supervisory attack and revelation. Basel II is operational in Mauritius as from March 2008 on a parallel tally with Basel I.
Additionally, the Guideline on Operational Risk Management and Capital Adequacy Determination ( 2008 ) stipulates that “ Bankss shall calculate a composite Capital Adequacy Ratio, embracing both recognition and operational hazard. The composite Capital Adequacy Ratio of 10 % is required which is above the minimal 8 % prescribed by the Basel Committee on Banking Supervision.
With a position to reenforce hazard direction patterns by operators, the Bank of Mauritius issued and amended several guidelines[ 1 ]during the last old ages. To guarantee that appropriate capital militias are kept, new Guidelines on Capital Adequacy Ratio for non-bank deposit-taking establishments licensed under the Banking Act 2004 were issued in October 2009.
Under the Guideline on recognition damage Measurement and Income Recognition ( 2004 ) , Board of Directors of Bankss are required to set up recognition hazard direction policy and recognition damage acknowledgment and impairment acknowledgment and measuring policy. The chief intents of the Guideline is to guarantee that the Board of Directors and the Chief Executive Officer ( Management organic structure ) is adhering to their assigned duties and answerabilities as respects recognition hazard direction ; and to sketch the procedures to be used in pull offing the recognition activity of a fiscal establishment.
Harmonizing to the Guideline, a fiscal establishment must set up a written recognition hazard policy. This includes a statement of rules regulating the extent to which the establishment is willing to accept recognition hazard ; and set up prudent bounds on the fiscal establishment ‘s exposure to recognition hazard. The recognition hazard policy should stipulate how jobs related to recognition hazard must be managed.
Additionally, the CAMEL evaluation model, which is used by the BoM for doing quarterly appraisals of banking operators, has been reviewed by placing critical sub-parameters for each constituent – viz. capital, plus quality, direction, net incomes and liquidness – and finding their relevant benchmarks to provide for a more comprehensive and nonsubjective monitoring of the public presentation and soundness of the banking sector.
To stay globally competitory, Bankss have to fall back to international convergence of hazard direction and coverage. For case, the International Accounting Standard 39 besides negotiations about recognition hazard. IAS 39 requires that fiscal establishments shall measure recognition damage and guarantee purveying on a recognition portfolio footing. Fiscal establishments must, hence, set up appropriate systems and processes to place credits with similar features in order to measure the grade of their recoverability on a portfolio footing.