Implementation of Geneva Conventions Act, 2012
R 385
Banks Act, 1990 (Act No. 94 of 1990)NoticesDesignation of an Activity not Falling within the meaning of "The Business of a Bank"Exemption Notice relating to Securitisation Schemes1. Definitions |
In this Schedule, "the Act" means the Banks Act, 1990 (Act No. 94 of 1990), and any word or expression to which a meaning has been assigned in the Act shall bear such meaning and, unless the context otherwise dictates—
"asset"
means an asset as defined in the Framework for the Preparation and Presentation of Financial Statements in terms of Financial Reporting Standards, as amended from time to time;
"asset-backed commercial paper ("ABCP") programme"
means a programme in terms of which predominately commercial paper with an original maturity of one year or less is issued to investors, which commercial paper is backed by assets or other exposures held in an insolvency remote special-purpose institution, or such other programme as may be specified in writing by the Registrar;
"associate"
means an associate as defined in International Accounting Standard 28 (AC 110), Investments in Associates, as amended from time to time;
"associated company"
in relation to an institution other than a bank or an institution within a banking group that transfers assets in terms of a traditional securitisation scheme or risk in terms of a synthetic securitisation scheme to a special-purpose institution, means a subsidiary or fellow subsidiary of that institution and includes an associate of that institution;
"clean-up call"
in relation to—
| a) | a traditional securitisation scheme means an option that makes provision for— |
| i) | the commercial paper issued in terms of the said securitisation scheme to be called or repaid before all the underlying or securitisation exposures have been repaid; |
| ii) | the repurchase of the remaining securitisation exposures and assets, |
that is, the repurchase of the remaining securitisation exposures and assets once the pool balance or outstanding securities have fallen below a specified level;
| b) | a synthetic securitisation scheme means a contractual provision or clause that provides for the termination of credit protection when the amount of the underlying exposures is less than a specified amount; |
"commercial paper"
means-
| a) | any written acknowledgement of debt, irrespective whether the maturity thereof is fixed or based on a notice period, and irrespective whether the rate at which interest is payable in respect of the debt in question is a fixed or floating rate; or |
| b) | debentures or any interest-bearing written acknowledgement of debt issued for a fixed term in accordance with the provisions of the Companies Act; or |
| c) | preference shares, |
but does not include bankers' acceptances;
"Commercial Paper Notice"
means Government Notice No. 2172, published in Government Gazette No. 161 67 on 14 December 1994;
"Companies Act"
means the Companies Act, 1973 (Act No. 61 of 1973), as amended;
"credit-enhancement facility"
means any facility or arrangement in terms of which the provider of such a facility or obligor under the arrangement is obliged to absorb losses associated with-
| a) | the assets transferred in terms of a traditional securitisation scheme; or |
| b) | the risk transferred in terms of a synthetic securitisation scheme, |
including both a first-loss credit-enhancement facility and a second-loss credit enhancement facility;
"credit-enhancing interest-only strip"
means an asset that-
| a) | represents a valuation of cash flows related to future margin income; and |
| b) | is subordinated; |
"credit rating"
means a rating assigned by an eligible institution to commercial paper issued in respect of a traditional or synthetic securitisation scheme;
"delayed payment on asset"
means a delayed payment on assets that does not result directly or indirectly from a default or potential default in respect of the underlying asset, but which results, inter alia, from administrative or technical difficulties experienced in respect of the collection of payments in respect of the underlying asset;
"disclosure document"
means-
| a) | a prospectus; or |
| b) | a placing document; or |
| c) | an offering circular; or |
| d) | any other document with similar import, |
published in order to provide certain information relating to a traditional or synthetic securitisation scheme to prospective investors in the said securitisation scheme;
"domestic rating"
means a rating that-
| a) | is tiered against an assumed best possible rating, which is usually that of the national Government; |
| b) | does not incorporate the sovereign risks of South Africa; |
| c) | gives an indication of the relative risks only within the Republic of South Africa, and |
| d) | may not necessarily be comparable across different countries; |
"equity share capital"
means equity share capital as defined in section 1 of the Companies Act.
"excess spread"
in relation to a securitisation scheme means income received by a special-purpose institution, net of any relevant costs and expenses;
"Financial Services Board"
means the board established by section 2 of the Financial Services Board Act;
"Financial Services Board Act"
means the Financial Services Board Act, 1990 (Act No. 97 of 1990), as amended;
"first-loss credit-enhancement facility"
means a credit-enhancement facility that represents the first level of credit enhancement in a traditional or synthetic securitisation scheme;
"implicit support"
means support provided by a bank or another institution within a banking group of which such a bank is a member to any party involved in a securitisation scheme in excess of a predetermined contractual obligation;
"insolvency remote"
in respect of a special-purpose institution, means that the assets of such a special-purpose institution shall not be subject to any claim of an institution-
| a) | transferring assets in terms of a traditional securitisation scheme; or |
| b) | transferring risk in terms of a synthetic securitisation scheme, |
to the special-purpose institution, as a result of such a transferring institution's insolvency;
"institution"
includes a bank or any other institution within a banking group;
"institutions within a banking group"
means the following institutions that may form part of a banking group:
| a) | All banks in such a group. |
| b) | All subsidiaries, joint ventures, or associates of such banks. |
| c) | The controlling company of such banks. |
| d) | All other subsidiaries, joint ventures and associates of such bank controlling company. |
| e) | Any other entity designated by the Registrar; |
"liquidity facility"
means a facility provided in respect of a traditional or synthetic securitisation scheme in order to cover deficiencies in cash flows within the said securitisation scheme(s), resulting from, amongst other things,
| a) | time differences between the payment of interest and principal on the assets transferred, or other payments due in terms of a traditional securitisation scheme, and payment in respect of the senior commercial paper; or |
| b) | time differences between the payment of interest and principal on assets that serve as collateral, purchased in terms of a synthetic securitisation scheme, and payment in respect of the senior commercial paper; or |
| c) | market disruptions; or |
| d) | a combination of any of the matters specified above, |
and which facility does not constitute a credit-enhancement facility;
"national Government securities"
means all loan stock issued by the national Government or instruments guaranteed by the national Government;
"originator"
in relation to-
| a) | a traditional securitisation scheme means an institution that, whether at the commencement or during the life of the traditional securitisation scheme, transfers assets from its own balance sheet, which assets are assets other than national Government securities or qualifying items, in terms of a traditional securitisation scheme; |
| b) | a synthetic securitisation scheme means an institution that, whether at the commencement or during the life of the synthetic securitisation scheme, uses a credit-derivative instrument to transfer the risk associated with a specified pool of assets, other than national Government securities or qualifying items, to investors without actually selling the assets; |
| c) | an asset-backed commercial paper programme means an institution that serves as a sponsor in respect of the programme that acquires exposures other than from the sponsor's own balance sheet, |
Provided that when-
| i) | the assets, other than national Government securities or qualifying items, referred to in paragraph (a) above; or |
| ii) | the risk associated with a specified pool of assets, other than national Government securities or qualifying items, referred to in paragraph (b) above, |
constitute 10 per cent or less of the total assets or risks transferred, such an institution shall for purposes of this Schedule be regarded as-
| A) | a repackager; or |
| B) | when such an institution also acts as a sponsor in respect of the same securitisation scheme, as a sponsor; |
"parties involved in a securitisation scheme"
means a special-purpose institution, parties acting in primary roles and parties acting in secondary roles;
"preference share"
when issued by a special-purpose institution that is a company, means such preference shares not forming part of the equity share capital of the special-purpose institution;
"primary role"
means the participation by an institution in a traditional or synthetic securitisation scheme as an originator, remote originator, sponsor or a repackager;
"qualifying items"
means all loan stock listed on the Bond Exchange of South Africa, or any other loan stock listed on a financial exchange licensed by the Financial Services Board;
"Registrar"
means the Registrar of Banks designated in terms of section 4 of the Act;
"remote originator"
means an institution that directly or indirectly lends money to a special-purpose institution in order for the special-purpose institution to take transfer of assets in terms of a traditional securitisation scheme or risk in terms of a synthetic securitisation scheme;
"repackager"
means an institution that, whether at the commencement or during the life of a traditional or synthetic securitisation scheme, acquires and subsequently-
| a) | transfers the assets; or |
| b) | transfers the risk relating to assets, |
consisting of national Government securities or qualifying items of third parties via its balance sheet in terms of a traditional or synthetic securitisation scheme: Provided that an institution that, whether at the commencement or during the life of the traditional or synthetic securitisation scheme, acquires and subsequently transfers the assets or risk(s) relating to assets, consisting of assets other than national Government securities or qualifying items of third parties via its balance sheet in terms of the said traditional or synthetic securitisation scheme, shall for purposes of this Schedule be regarded as an originator;
"revolving assets"
mean loan facilities or other underlying transactions in terms of which debtors under such loan facilities or other underlying transactions are permitted to vary, within an agreed limit, the amount utilised in terms of the underlying transaction, or to repay amounts in terms of the underlying transactions at their own discretion, subject, in certain circumstances, to a minimum amount per payment period or in accordance with a fixed repayment schedule;
"secondary role"
means the participation by an institution in a traditional or synthetic securitisation scheme, as a provider of a credit-enhancement facility, a provider of a liquidity facility, an underwriter, a purchaser of senior commercial paper, a servicing agent or a counterparty to a transaction included in the trading book of a bank;
"second-loss credit-enhancement facility"
means a credit-enhancement facility that represents the second and further levels of credit enhancement in a traditional or synthetic securitisation scheme: Provided that-
| a) | such facility benefits from a substantial first-loss credit-enhancement facility, that is, when the first-loss credit-enhancement facility covers some multiple, as opposed to a fraction, of historical losses or expected losses estimated by way of simulation or other technique; and |
| b) | such facility may be drawn only after the first-loss credit-enhancement facility has been exhausted, |
and when there has not been compliance with the above conditions, the facility concerned shall for purposes of calculating a bank's prescribed capital requirement be regarded as a first-loss credit-enhancement facility in terms of this Schedule;
"servicing agent"
means an institution that acts as servicing agent in relation to the collection of the amounts due in terms of a traditional or synthetic securitisation scheme;
"senior commercial paper"
means commercial paper issued in terms of a traditional or synthetic securitisation scheme, the purchase of which commercial paper does not constitute providing a first-loss or second-loss credit-enhancement facility;
"short-term liquidity facility"
means a liquidity facility provided in respect of a traditional or synthetic securitisation scheme, for a period of less than one year;
"special-purpose institution"
means a company or trust, insolvency remote, incorporated, created or used solely for the purpose of the implementation and operation of a traditional or synthetic securitisation scheme;
"sponsor"
in relation to-
| a) | a traditional securitisation scheme means an institution that facilitates, whether at the commencement or during the life of the traditional securitisation scheme, in the capacity of arranger and/or structuror, the indirect transfer of assets, that is, not from the institution's own balance sheet, to a special-purpose institution; |
| b) | a synthetic securitisation scheme means an institution that facilitates, whether at the commencement or during the life of the synthetic securitisation scheme, in the capacity of arranger and/or structuror, the indirect transfer of risk, that is, not from the institution's own balance sheet, to a special-purpose institution; |
| c) | an asset-backed commercial paper programme means an institution that, in fact or in substance- |
| i) | manages or advises the programme; and |
| ii) | places securities into the market; and/or |
| iii) | provides a liquidity facility to the asset-backed commercial paper programme; or |
| iv) | provides a credit-enhancement facility to the asset-backed commercial paper programme, |
which institution shall for purposes of this Schedule be regarded as an originator;
"synthetic securitisation scheme"
means a scheme whereby a special-purpose institution-
| a) | issues commercial paper to investors; and |
| b) | uses the proceeds of such issuance primarily to obtain- |
| i) | credit-risk exposure relating to- |
| A) | an underlying asset; |
| B) | a reference entity; or |
| C) | a reference asset, |
through the use of funded or unfunded credit-derivative instruments or guarantees, and
| ii) | assets that serve as collateral; and |
| c) | makes payments primarily- |
| i) | in respect of the commercial paper so issued; or |
| ii) | to an institution acting in a secondary role, |
which payments are made from-
| A) | the cash flows arising from the assets that serve as collateral; and |
| B) | the fees and/or premium paid to the special-purpose institution by an institution acting as an originator, remote originator or repackager; |
"traditional securitisation scheme"
means a scheme whereby a special-purpose institution-
| a) | issues commercial paper to investors; and |
| b) | uses the proceeds of such issue primarily to obtain or invest in assets; and |
| c) | makes payments primarily- |
| i) | in respect of the commercial paper so issued; or |
| ii) | to an institution acting in a secondary role, |
which payments are made from-
| A) | the cash flows arising or proceeds derived from the assets transferred to such a special-purpose institution by an originator or a repackager; |
| B) | the cash flows arising or proceeds derived from assets in which the special-purpose institution invested; or |
| C) | facilities granted to the special-purpose institution by an institution in accordance with the provisions of this Schedule; |
"transfer"
in relation to-
| a) | a traditional securitisation scheme means the sale and transfer of assets; or |
| b) | a synthetic securitisation scheme means the transfer of risk by means of a credit-derivative instrument or guarantee, or |
such other method of transfer as may be directed or specified in writing by the Registrar;
"underlying asset"
means-
| a) | an asset transferred in terms of a traditional securitisation scheme; or |
| b) | an asset that serves as collateral in terms of a synthetic securitisation scheme; |
"underlying transaction"
means the transaction in terms of which-
| a) | an asset that is transferred by an institution in terms of a traditional securitisation scheme; or |
| b) | the risk that is transferred by an institution in terms of a synthetic securitisation scheme, |
had its origin;
"underwriting"
means exposure that includes all underwriting commitments, whether in writing or verbally, including all note-issue facilities and revolving underwriting facilities in respect of which the contingent risk arises from the bank's role as underwriter of such issues, guaranteeing to provide funds when other parties have refused to do so.
