In this section you can search eStandardsForum Weekly Reports by keyword, or by country, region, or standard in the Advanced Search function. Weekly Reports compile newsworthy events relevant to country risk analysis, international best practices, and other important information regarding developments in the international financial system. They also cover credit rating actions, International Monetary Fund Article IV consultations, updates to existing Standards and Codes, and other country-specific developments. A pdf-version of the Weekly Report can be accessed in the Publications & Policy Brief section.

Sri Lanka - August 17, 2008 The Monetary Board of the Central Bank of Sri Lanka has recently issued an amendment to the Direction on Corporate Governance for banks, incorporating the provisions of the order of 8 July 2008 of the Supreme Court. This new Direction replaces the one issued by the Monetary Board on 23 April 2008. In terms of the new Direction, a general exemption is granted in respect of a bank director who has reached the age of 70 as at 1 January 2008 or who would reach the age of 70 prior to 31 December 2008, permitting such director to continue for a further maximum period of 3 years commencing 1 January 2009. Similarly, a bank director who has completed 9 years as at 1 January 2008, or who completes such term at any time during the year 2008, is permitted to continue for a further maximum period of 3 years commencing 1 January 2009. In relation to the number of companies in which a bank director could hold the post of director, the limit has been confirmed at 20 companies. If, however, any person holds director posts in excess of the limitation of 20 companies, at present, such person has been given a maximum period of three years from 1 January 2009 to comply with the above-mentioned limitation and notify the Monetary Board accordingly. If, for any reason such as ill health or other incapacity, the Monetary Board considers that the exemptions referred to above on the age, length of service and the number of posts of director that could be held by a director of a licensed bank should not be availed of, such ground may be notified to the person by the Monetary Board, and after a hearing, the Monetary Board may limit the period of exemption. Source: Colombo Page–Sri Lanka

Pakistan - August 14, 2008 The State Bank of Pakistan [SBP] has issued "Guidelines on Internal Capital Adequacy Assessment Process" on its website. These guidelines are aimed to supplement the instructions issued vide circular Number 08 dated June 27, 2006 on the Basel II implementation in Pakistan. In terms of the circular, banks/DFIs are required to have a process for assessing their overall capital adequacy on continuing basis in relation to their risk profile and a strategy for maintaining their capital levels. All Banks/DFIs are advised to submit the major findings of ICAAP [Internal Capital Adequacy Assessment Process] latest by April 30, 2009 to Banking Surveillance Department. The SBP emphasized that ICAAP is an ongoing activity and submission of findings at a particular date should not be construed as a periodical exercise. Source: Daily Times–Pakistan

China - August 14, 2008 The People's Bank of China (PBOC), the central bank, would establish a foreign exchange department. With the approval of the State Council, the Cabinet, major functions of the new department include: administering foreign exchange, regulating domestic foreign exchange market, conducting analysis on the global foreign exchange market and international capital flows, and advising to policy makers, the central bank said in a statement on Thursday. This would increase the total number of departments under the central bank to 19 from 18 after its last institutional reorganization in 2003. Different from the State Administration of Foreign Exchange, the new department is to focus more on policy work instead of detailed management. Also as a result of the State Council's decision, PBOC would form financial supervision and collaboration mechanism with China Banking Regulatory Commission, China Securities Regulatory Commission, and China Insurance Regulatory Commission. Source: Xinhua News Agency

European Union - August 14, 2008 Experts have answered the call of Europe's parliament and proposed a pan-European accounting standards body for stronger representation of the continent. The European Financial Reporting Advisory Group [EFRAG], which advises the European Parliament in endorsing IFRS [International Financial Reporting Standards], is proposing to beef up its own resources and structures so it can confer on international standards, on equal terms with the International Accounting Standards Board [IASB]. EFRAG's proposal follows concerns by European finance ministers that the continent's interests are not sufficiently represented at the level of the IASB, as well as a desire to have a say in the agenda of the international standard setter. EFRAG chairman Stig Enevoldsen said a long-term goals was to ensure that there is no 'monopoly' of accounting issues as it is important for Europe to provide input into the IASB's processes and agenda based on Europe's background and way of doing transactions. Source: Financial Director–United Kingdom

South Africa - August 14, 2008 Proposals to include a business rescue process in the Companies Bill would introduce "significant but unquantifiable risk into every contract and undermine the whole contractual regime" of the corporate environment in South Africa, the portfolio committee on trade and industry heard yesterday. The additional risk would not only lead to an increased cost of funding for companies but could also have implications under Basel II for the country's banks, including the need to hold additional capital to reflect the increased risk. The Companies Bill, which involves a rewrite of the Companies Act, provides that during a business rescue, the supervisor of the process can "cancel or suspend entirely, partially or conditionally any provision of any agreement". Source: Business Report–South Africa

India - August 13, 2008 India's stock market regulator eased the pricing rules for companies selling shares to institutional investors and reduced the time required for completing a rights share sale. Companies can sell shares based on the average price of two weeks preceding the offer, Securities & Exchange Board of India Chairman C.B. Bhave said today. Rights issue must be completed in 43 days from 109 days at present, he said. ``It will not be practically possible,'' to sell shares as per the current pricing formula in the present market scenario, said Bhave. Companies currently sell shares using either the average six-month price, or the average rate of two weeks before the offering, depending on which is higher. Mutual funds would be required to disclose their results within four months of the end of the financial year, instead of six months currently, Bhave said. Source: Bloomberg

India - August 13, 2008 Apex accounting body ICAI [Institute of Chartered Accountants of India] today issued four new standards to help companies streamline internal audits for minimizing pilferage, ensuring cost efficiency, and mitigating waste. This will standardize the process of internal checks in companies, and "companies can now expect that professionals engaged in internal audit will be rendering services of such standards as being issued by the institute," ICAI President Ved Jain told reporters here. Management appoints chartered accountants (CA) or non-CAs to conduct such checks for detecting the anomalies in the management system through internal audit. In the view of this, the council in its meeting held on August 7, 8 approved four more internal audit standards on analytical procedures, sampling, reporting, and quality assurance in internal audit. The council also issued an auditing standard relating to management representation in harmony with international norms by International Auditing and Assurance Standard Board (IAASB). This standard is regarding the acknowledgement by the management that it is fulfilling its responsibility relating to preparation of financial statements and internal control. Source: Business Standard–India

Singapore - August 13, 2008 On July 16, 2008, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Singapore. Executive Directors noted that the pragmatic macroeconomic policies and proactive structural reforms have underpinned Singapore's strong economic performance and increased resilience to adverse external shocks. Directors observed that, given the challenges of weakening global growth, ongoing turbulence in international financial markets, and mounting inflation pressures, the pace of economic activity in Singapore is likely to decline in the near term, with inflation remaining elevated. Directors commended the Monetary Authority of Singapore for continuing efforts to bolster the already strong regulatory and supervisory frameworks, including by enhancing stress-testing and crisis management. Directors welcomed Singapore's participation in the Fund-facilitated initiative to identify best practices for sovereign wealth funds. Source: International Monetary Fund

United States - August 13, 2008 The nation's primary self-regulatory organizations for the securities industry--the Financial Industry Regulatory Authority (FINRA) and NYSE Regulation, Inc.--today announced an agreement with ten U.S. exchanges to strengthen investor protection by consolidating the surveillance, investigation, and enforcement of insider trading in equity securities. Under the agreement, each exchange gives responsibility for the detection of insider trading to FINRA for Amex- and NASDAQ-listed securities and to NYSE Regulation for New York Stock Exchange- and NYSE Arca-listed securities, no matter where trading occurs in the United States. Market centers participating in the agreement, which has been filed with the Securities and Exchange Commission (SEC) for approval, are the American Stock Exchange, the Boston Stock Exchange, the CBOE Stock Exchange, the Chicago Stock Exchange, the International Securities Exchange, the NASDAQ Stock Market, the National Stock Exchange, the New York Stock Exchange, NYSE Arca, the Philadelphia Stock Exchange, and FINRA. Source: MarketWatch–United States

Saudi Arabia - August 12, 2008 On July 21, 2008, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Saudi Arabia. Executive Directors welcomed the continued strong growth performance and highly positive external financial position, and concurred with the authorities' plans to expand oil production and refining capacity to support global oil market stability. Directors recommended that public expenditure focus on investments in infrastructure, education, and public services, with a view to diversifying the economy, encouraging job creation, and reducing dependence on oil income over the medium term. Directors welcomed efforts to further liberalize the financial sector and strengthen its soundness. They encouraged the authorities to continue fostering greater competition in the financial sector and developing the corporate market for Islamic bonds ("sukuk"). Directors commended the central bank for progress made in implementing Basel II. Directors welcomed the authorities' recent subscription to the General Data Dissemination Standards. They welcomed the progress made in compiling Saudi Arabia's International Investment Position data for the public sector. Source: International Monetary Fund

Indonesia - August 12, 2008 On August 1, 2008, the Executive Board of the International Monetary Fund (IMF) concluded the 2008 Article IV consultation with Indonesia. Executive Directors welcomed the resilience of the Indonesian economy to the global slowdown and financial market turmoil, underpinned by strong macroeconomic fundamentals and the highly liquid and well-capitalized banking system. Directors observed that Indonesia's banking system remains relatively resilient to macroeconomic shocks and exchange rate risks. They agreed that the rapid credit growth calls for close monitoring and strict adherence to prudential regulations in line with international standards. Directors supported the planned gradual transition to Basel II, and welcomed the review of the financial safety net, with a view to ensuring timely responses in case of a crisis. They looked forward to Indonesia's early participation in the Financial Sector Assessment Program (FSAP). Source: International Monetary Fund

Sweden - August 11, 2008 On August 1, 2008, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Sweden. Executive Directors commended Sweden for its strong economic performance with high output and employment growth, moderate inflation, a well-functioning financial system, solid public finances, and a favorable external position. The main challenges ahead are to continue to strengthen the financial system's resilience to adverse shocks and to firmly anchor inflation expectations. Directors emphasized that the Swedish financial sector is performing well and that its financial indicators appear to be sound. Directors noted that market signals were indicating that banking risks have increased. They encouraged the authorities to complete the draft law on a new banking resolution framework as soon as possible, and recommended that it be applied in a comprehensive manner. Directors welcomed the meaningful progress made by the authorities in addressing the 2002 Financial Sector Assessment Program (FSAP) recommendations, and agreed that an FSAP Update could help identify the policies and measures needed to bolster further financial sector resilience. Source: International Monetary Fund

Brazil - August 8, 2008 On July 11, 2008, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Brazil. Executive Directors...praised the Brazilian authorities for their strong policy track record which, together with highly supportive external conditions in recent years, has boosted Brazil's economic performance and improved its resilience to adverse external shocks. Directors welcomed the authorities' strengthening of monetary and fiscal policies. Directors urged the authorities to consider carefully the design and purpose of the Brazilian Sovereign Fund (FSB). With regard to the financial sector, Directors noted that the prudential framework is generally sound. In the context of adopting the International Financial Reporting Standards, Directors considered that the existing prudential framework for credit risks should be maintained. Directors noted the staff's finding that the current global financial turmoil has highlighted the need to improve liquidity oversight and lender of-last-resort facilities, and that work is under way to strengthen the legal foundations of the Central Bank's lender of last resort facilities. In this general context, Directors recommended an FSAP [Financial Sector Assessment Program] update. Source: International Monetary Fund

China - August 7, 2008 China announced changes to its foreign-exchange rules to address surging growth in its hard currency reserves, saying domestic companies can now keep their foreign-currency income overseas and pledging tougher penalties for illicit capital inflows. The new rules were announced late Wednesday and take effect immediately. They are part of a government effort to better regulate the flow of capital in and out of China's fast-growing and increasingly internationalized economy, while also moving toward a more flexible exchange rate mechanism for the Chinese currency. The changes remove a requirement that Chinese companies bring all of their foreign-exchange income into the local banking system. By allowing companies to keep more foreign currency offshore, the rules could reduce inflows into China and potentially lessen upward pressure on the value of the yuan. Source: The Wall Street Journal

Accounting - August 7, 2008 The International Accounting Standards Board (IASB) today published for public comment proposals to simplify the calculation of earnings per share (EPS) and to eliminate differences between the methods required by International Financial Reporting Standards (IFRSs) and US accounting standards to calculate EPS. The proposals are part of the short-term convergence project that the IASB is conducting jointly with the US Financial Accounting Standards Board (FASB). Consequently, the FASB has also published today an exposure draft to amend SFAS 128 Earnings per Share. In particular, the proposals aim to achieve convergence by: providing a clear principle to determine which instruments should be included in the EPS calculation; clarifying the EPS calculation for particular instruments, such as contracts to sell or repurchase an entity's own shares and participating instruments; and simplifying the EPS calculation for instruments that are accounted for at fair value through profit or loss. The IASB invites comments on the exposure draft Simplifying Earnings per Share (proposed amendments to IAS 33) by 5 December 2008. Source: International Accounting Standards Board

Accounting - August 7, 2008 The International Accounting Standards Board (IASB) today published for public comment an exposure draft of proposed amendments to eight International Financial Reporting Standards (IFRSs) under its annual improvements project. The proposals range from guidance added to the Appendix of IAS 18 Revenue, on how to determine whether an entity is acting as a principal or as an agent, to changes of wording to clarify the meaning and remove unintended inconsistencies between IFRSs. The IASB adopted an annual process in 2006 to make necessary, but non-urgent, amendments to IFRSs that will not be included in another project. Unless otherwise specified, the proposed effective date for the amendments is for annual periods beginning on or after 1 January 2010, although entities are permitted to adopt them earlier. The proposed effective date for those amendments arising from the revised IFRS 3 Business Combinations is 1 July 2009 (in line with the effective date for the revised standards on business combinations--IFRS 3 and IAS 27 Consolidated and Separate Financial Statements). Source: International Accounting Standards Board

United Kingdom - August 6, 2008 On July 30, 2008 the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the United Kingdom. Executive Directors...observed that, following a decade of sustained strong economic performance, including stable economic growth and low inflation, the UK economy is now facing several concomitant shocks. The financial sector strains have also triggered a broad-based effort to reform the financial stability framework. Directors welcomed the ongoing efforts to stabilize financial markets, including the introduction of the Special Liquidity Scheme. With regard to the financial stability framework, Directors praised the thoroughness of efforts to diagnose and resolve the problems illuminated by recent market tension. They welcomed the close tripartite cooperation among the Bank of England, the Financial Services Authority, and the Treasury, and the openness of the consultation process. This process has correctly highlighted the need for a special bank resolution regime, a statutory role of the Bank of England in the financial stability framework, and strengthened operations of the Financial Services Authority. Source: International Monetary Fund

Nigeria - August 6, 2008 The Central Bank of Nigeria (CBN) has mandated banks to publish their lending and deposit rates in to ensure fairness and transparency in the market. The apex bank has also handed off the common year end period for banks. These major decisions were arrived at when the Monetary Policy Committee comprising the CBN and managing directors of banks in the country met on Tuesday in Abuja. Addressing the media after the Monetary Policy Committee meeting, the CBN governor, Professor Chukwuma Soludo, said the committee, after extensive deliberations, decided that banks were now to disclose to the public their deposit rates and their base lending rates and other charges for all the sectors of the economy. Prof. Soludo, who said this should be published in the banks' respective websites and updated daily, stated that the apex bank would now collate all these rates and publish in its own website monthly. Source: Nigerian Tribune

China - August 6, 2008 Listed commercial banks in China should expose the information about their financial bond holdings in their regular reports, according to a new document issued by China Securities Regulatory Commission (CSRC). The new regulation specifies the items to be disclosed, covering the category and amount of financial bonds held, the face value of main financial bonds, annual interest rates and due dates, and information about provisions for asset depreciation. It will take effect on Sept. 1, 2008, aiming to standardize the listed commercial banks' information disclosure, strengthen risk management, and protect investors' legitimate rights and interests. Source: Insurance News Net–United States

China - August 6, 2008 The China Banking Regulatory Commission (CBRC) has confirmed it will start accepting applications from domestic commercial banks to implement the Basel II framework from 2010. In a statement published on its website, the CBRC says 2008 will be devoted to the preparation of implementation guidelines. A test period for policies will begin in 2009. The CBRC has already drafted five sets of supervision guidelines on the implementation of Basel II, which represent a more comprehensive and forward-looking set of standards for capital adequacy. The guidelines encourage Chinese banks to improve their risk management and to adopt the capital measurement approach with high risk sensitivity, to guard against rushing irrationally into the implementation. Source: OpRisk & Compliance–United Kingdom

India - August 6, 2008 Any new customer acquired by a bank may soon have to undergo a risk assessment. The Financial Intelligence Unit (FIU), the anti-money laundering agency of the government, is putting in place a system that will enable banks to risk-assess their customers, a senior official said. At a seminar, FIU Director Arun Goyal said that so far, India has received 50 references from various countries seeking information on alleged money laundering transactions, while New Delhi had made 15 requests. Meanwhile, the Reserve Bank of India (RBI) has asked non-banking finance companies (NBFCs) to tighten their anti-money laundering processes. Source: MSN India

Philippines - August 6, 2008 Congressmen want to add more teeth to the law against money laundering and enable authorities to go after casinos, Internet gaming sites, and professionals such as accountants and brokers who may have a hand in illegal transactions. Speaker Prospero Nograles and Rep. Jaime Lopez, chairman of the House committee on banks and financial intermediaries, jointly filed House Bill 4784 seeking to further amend the seven-year-old law, which was first revised in 2003. Section 1 of the bill proposes the amendment of Section 3 of Republic Act 9160 (Anti-Money Laundering Law) by adding these phrases: "covered institution or person" shall also refer to non-financial businesses and professions such as: casinos, including Internet casinos; real estate agents; dealers in precious metals; dealers in precious stones; lawyers, notaries, other independent legal professionals and accountants when they prepare for or carry out transactions for their clients' money, monetary instrument, property or other assets. Section 2 of the bill seeks the amendment of Section 3 (i) of RA 9160 so that "unlawful activity" refers to any act or omission or series or combination thereof involving or having direct relation to the following in addition to those provided for in RA 9194: terrorism and conspiracy to commit terrorism; bribery; frauds and illegal exactions and transactions; malversation of public funds and property; forgeries and counterfeiting; human trafficking; carnapping; and, violations of pertinent sections of the Revised Forestry Code, Philippine Fisheries Code, Philippine Mining Act, Wildlife Resources Conservation and Protection Act, and National Caves and Cave Resources Management and Protection Act. On the reporting of covered and suspicious transactions, the bill proposes an amendment of Sec. 9 of RA 9194 which deals on the prevention of money laundering, customer identification, record keeping, and reporting of covered and suspicious transactions. Source: Manila Standard Today

United States - August 6, 2008 A group of Wall Street executives released a report on Wednesday that outlined how the industry failed to foresee the financial meltdown of the last year and what companies can do to improve risk management. The 172-page report, written by chief risk officers and senior executives at banks like Lehman Brothers, Merrill Lynch and Citigroup, also provides suggestions about technical issues at the same time as it offers a bit of a mea culpa. The report focuses on several issues, including accounting rules for bundles of mortgages, new tests for liquidity, and disclosure of risks in complicated financial instruments. Source: The New York Times

Dominican Republic - August 5, 2008 On August 5 eStandardsForum completed a comprehensive review of the Dominican Republic's (DR) compliance with the 12 Key Standards for Sound Financial Systems. Changes include an upgrade in Securities Regulation from Insufficient Information to Intent Declared following the release of a 2007 letter of intent from the Government of the Dominican Republic to the IMF to strengthen regulation and oversight of the securities sector and confirmed by a World Bank report of the same year. New information from the World Bank, in its 2007 report on the Financial Sector Technical Assistance Project in the DR, led to changes in compliance with Insurance Regulation from Insufficient Information to No Compliance. Following this review, the overall score for DR on the eStandardsForum Standards Compliance Index improved from 11.67 to 15. Source: eStandardsForum

India - August 5, 2008 Capital markets regulator, Securities and Exchange Board of India (SEBI), will implement the new initial public offering (IPO) process by end-August. And to ensure the process works smoothly, the old process will continue simultaneously in the first stage of its execution as a pilot project. Under the proposed norms, the money an investor pays while applying for an IPO will remain in his bank and earn interest till the allotment is made. Earlier, the application money had to be transferred to a depository -- National Securities Depository Limited (NSDL) or Central Depository Services Limited (CDSL) -- and the interest the money earned did not reach the investor. This new mode of payment where the application amount is blocked in the bank account will apply to public issues offered under the book building route. Only those retail investors who bid at the cut-off price as the single option and agree not to revise their bids will be eligible for the same. Source: Hindustan Times–India