Membership to CODI is automatic and compulsory for all registered banks. This includes all commercial banks, local branches of foreign banks, mutual banks, and cooperative banks. Currently there are 17 commercial banks, three mutual banks, six cooperative banks and 12 local branches of foreign banks.
Is there a need for banks to register with CODI to become members?
No, all registered banks will automatically become members of CODI when CODI is established.
Which banks will be members of CODI?
Membership will be automatic and compulsory for all banks and branches registered in terms of the Banks Act 94 of 1990 (Banks Act), Mutual Banks Act 124 of 1993 (Mutual Banks Act) and the Co-operative Banks Act 40 of 2007 (Co-operative Banks Act). This definition includes banks operating within the borders of South Africa that are regulated and supervised by the Prudential Authority (PA) as the home or host supervisor.
Will cooperative financial institutions (CFIs) be members of CODI?
CFIs will not be members of CODI upon CODI’s establishment, but CODI will undertake work to include CFIs in the deposit insurance framework following its establishment.
Why was the maximum coverage level set at R100 000 per depositor per bank?
At a R100 000 coverage level, CODI will provide full protection for more than 90% of the depositors in South Africa. CODI’s mandate is to protect the less sophisticated customers who place their money in a bank for safe-keeping.
Will CODI charge banks separately for system upgrades every few years?
No, CODI’s levy includes a reserve to budget for periodic system upgrades and maintenance.
Will a cap be applied to the financial contributions by banks to CODI to ensure that banks do not pay excessive amounts to CODI?
There is no cap on the financial contribution of a bank to CODI, but banks’ contributions will be based on the covered balance of each qualifying depositor, that is, up to the maximum coverage level of R100 000.
What is the difference between the premiums and the levies banks must pay to CODI? Must banks pay both premiums and levies to CODI?
Banks must pay both an annual levy and monthly premiums to CODI. CODI will use the annual levy to cover its operational costs, including staffing and systems. The premiums will be used to fund the deposit insurance fund to be used to reimburse covered depositors.
If a bank does not have any covered deposit balances, how will it affect its financial contributions to CODI?
A bank with no covered deposit balances will still be a member of CODI and liable for the minimum annual levy. The bank will not pay the monthly premiums to CODI for as long as it has no covered deposits. The bank must still enter into a contractual agreement with CODI for the fund liquidity tier, but may not have a balance until it reports a covered deposit balance. The Chief Executive Officer and Chief Financial Officer of such a bank may have to submit a monthly declaration to CODI to confirm that the bank has no covered deposit balances. CODI may also ask the bank’s internal auditors to verify this annually.
Will CODI be independent of the SARB?
CODI will be an independent subsidiary of the SARB with its own board of directors and management team. Since CODI will be part of the broader SARB Group, it will have some governance and reporting obligations to the SARB, but its board will be responsible for overseeing CODI’s operations.
Why could CODI not use the banks’ returns submitted to the Prudential Authority (PA)?
Banks currently submit aggregated balances on balance sheet, income statement and risk-related items to the PA. CODI requires granular depositor information to enable it to fulfil its mandated function of protecting the covered depositors of a bank in resolution.
CODI requires banks to submit depositors’ personal information in their monthly deposit insurance submissions. Has CODI considered the compliance requirements of the Protectional for Personal Information Act 4 of 2013 (POPIA)?
Yes, CODI is working with the SARB’s POPIA team to ensure that it complies with the requirements of POPIA.
Will banks be required to provide depositor information in a single customer view format?
CODI will initially allow banks to provide the required information in either a single customer view (SCV) or granular manner. Banks that want to report in a granular format will need to apply to CODI for this and submit a plan for developing SCV reporting capabilities. Ultimately, CODI will expect all banks to report in an SCV manner.
Why is CODI not forcing all banks to comply with SCV reporting requirements?
CODI will have different types of banks as members and it will provide a range of reporting options to cater for all types of banks in South Africa. CODI expects all banks to, over time, be able to report in an SCV format.
Will banks report month-end or average balances to CODI?
A deposit insurer needs updated balances as at a point in time. The monthly deposit insurance submissions will be based on month-end figures. When CODI requests ad hoc submissions, it will specify the date on which the bank must base the submission.
How frequently will banks do deposit insurance submissions to CODI?
Banks will do monthly deposit insurance submissions.
When a local branch of a foreign bank is a member of a foreign deposit insurance scheme, will it still be a member of CODI?
The Financial Services Legislation Amendment Act 2019 (FSLAA) does not allow for the exemption of any member banks from being a member of CODI. Future amendments to the FSLAA may be considered to allow local branches of foreign banks that are already members of a foreign deposit insurance scheme to apply for exemption. CODI and the foreign deposit insurer will then agree which deposit insurance scheme the branch will be a member of.
What will CODI do with unclaimed amounts it cannot pay out?
Any unclaimed deposits will remain in the estate of the failed bank and will be managed by the liquidator in terms of the creditor hierarchy.