FINANCIAL SERVICES SUPERVISION REPORT 2015
CENTRAL BANK OF SEYCHELLES
TABLE OF CONTENTS
MESSAGE FROM THE GOVERNOR .................................................................................................... 1
ACRONYM ......................................................................................................................................... 4
OVERVIEW OF THE REPORT .............................................................................................................. 6
CHAPTER 1 – MACRO-ECONOMIC CONDITIONS OVERVIEW ................................................ 7
CHAPTER 2 - OVERVIEW OF THE INDUSTRY AND FSSD ...................................................... 10
2.1 OBJECTIVES ........................................................................................................................ 10
2.2 THE REGULATORY FRAMEWORK AND SUPERVISED INSTITUTIONS .................................. 11
2.3 SUPERVISORY STRUCTURE AND FUNCTION ...................................................................... 12
2.4 THE BANKING SECTOR ....................................................................................................... 14
2.4.1 OWNERSHIP OF BANKS ............................................................................................... 15
2.4.2 BRANCH NETWORKS ................................................................................................... 16
2.4.3 DEBIT CARDS, ATM NETWORKS, POS TERMINALS AND INTERNET BANKING ............. 16
2.4.4 EMPLOYEES ................................................................................................................. 19
2.4.5 COMPLAINTS STATISTICS ............................................................................................ 19
2.4.6 ABANDONED PROPERTY ............................................................................................. 20
2.5 BUREAUX DE CHANGE ....................................................................................................... 20
2.6 CREDIT INFORMATION SYSTEM ......................................................................................... 22
CHAPTER 3 - FINANCIAL ANALYSIS .................................................................................... 23
3.1 OVERVIEW OF THE BANKING SECTOR ...................................................................................... 23
3.1.1 ASSETS, LIABILITIES AND EQUITY .................................................................................... 23
3.1.1.1 TOTAL ASSETS ................................................................................................. 24
3.1.1.2 TOTAL LIABILITIES ........................................................................................... 29
3.1.1.3 EQUITY ............................................................................................................ 31
3.1.2 CAPITAL ADEQUACY ........................................................................................................ 31
3.1.2.1 CAPITAL BASE .................................................................................................. 32
3.1.2.2 TOTAL RISK-ADJUSTED ASSETS ....................................................................... 32
3.1.2.3 NET TANGIBLE CAPITALISATION RATIO .......................................................... 32
3.1.3 ASSET QUALITY ................................................................................................................ 33
3.1.4 EARNINGS ........................................................................................................................ 36
3.1.4.1 LEVELS AND TRENDS OF PROFITABILITY ......................................................... 36
3.1.4.2 COMPOSITION OF INCOME AND EXPENSES .................................................... 37
3.1.5 LIQUIDITY ........................................................................................................................ 39
3.1.6 SENSITIVITY TO MARKET RISK ......................................................................................... 40
3.2 OVERVIEW OF OTHER INSTITUTIONS ................................................................................ 42
3.2.1 SCU .............................................................................................................................. 42
3.2.2 DBS .............................................................................................................................. 43
3.2.3 HFC .............................................................................................................................. 44
CHAPTER 4 - DEVELOPMENTS IN THE SUPERVISORY FRAMEWORK AND THE FINANCIAL
SECTOR ................................................................................................................. 46
4.1 OVERVIEW OF DEVELOPMENTS ....................................................................................... 46
4.2 LEGISLATIVE DEVELOPMENTS .......................................................................................... 46
4.2.1 AMENDMENT TO CREDIT UNION ACT, 2009 .............................................................. 46
4.2.2 SECURED TRANSACTIONS ACT, 2015 .......................................................................... 49
4.2.3 APPROVAL/LICENSING FOR FINANCIAL INSTITUTIONS TO PROVIDE PAYMENT
SERVICES ..................................................................................................................... 49
4.3 DEVELOPMENTS RELATING TO THE SUPERVISORY FRAMEWORK AND THE FINANCIAL
SECTOR .............................................................................................................................. 50
4.3.1 FINANCIAL LEASING ........................................................................................................ 50
4.3.2 ADDITIONAL BANKING ACTIVITIES ................................................................................. 53
4.3.3 REVIEW OF RISKS RELATED TO OFFSHORE FINANCIAL ACTIVITIES ................................ 54
4.3.4 BASEL II & III ................................................................................................................... 57
4.3.5 RBS ................................................................................................................................. 59
4.3.6 FINANCIAL EDUCATION AND CONSUMER EMPOWERMENT ......................................... 59
4.3.7 CREDIT INFORMATION SYSTEM ..................................................................................... 62
4.3.8 LEGAL FRAMEWORK FOR NBFIS SUPERVISED BY CBS .................................................... 62
4.3.9 FSDIP .............................................................................................................................. 62
4.4 BMIO REORGANISATION PLAN .......................................................................................... 64
APPENDICES ………………………………………………………………………………………….……………………….67
APPENDIX 1: LOCATIONS AND CONTACT DETAILS OF BANKS’ BRANCHES, DBS, HFC AND SCU………...67
APPENDIX 2: LOCATION OF ATMS…………………………………………………………………………………………………...70
APPENDIX 3: LOCATION AND CONTACTS OF BDC…………………………………………………………………………….71
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MESSAGE FROM THE GOVERNOR
The mission of Central Bank of Seychelles (CBS) is to contribute towards the sustainable economic
growth and development of Seychelles through prudent monetary policy and maintenance of a sound
financial system. This report shows the endeavours towards the latter objective, principally through
the functions of the Financial Services Supervision Division (FSSD). It is an embodiment of CBS’ steps
to enhance transparency, educate the public and make information available to all stakeholders. On
this note, I would like to welcome you to this 2015 edition of the Financial Services Supervision report.
In Seychelles, our openness as a small island economy, creates an inherent disposition for the country
to be affected by global economic developments. For the year 2015, it was the reduction in
international commodity prices, particularly that of oil, which had noticeable influence on domestic
movements. Translating into lower costs in Seychelles, the value of imports fell, which reduced the
overall demand in the foreign currency market. Consequently, this was favourable for the country’s
balance of payment position, resulted in an appreciation of the domestic currency against the Euro
and Pound sterling and also allowed for accumulation of international reserves through CBS’ purchase
of foreign currency. At the end of 2015, international reserves stood at USD536 million representing
4.9 months of imports.
Additionally, the legacy of 2014’s record double digit credit growth, set the tone for tighter monetary
policy stance that CBS adopted for the most of 2015. In anticipation of inflationary pressures from
credit, which was expected to continue growing in the first half of 2016, the tighter policy transmitted
into higher interest rates during the year. Consequently, whilst growth in banks’ loans portfolio was
still observed, this was at a lower rate of 9.66 per cent in 2015.
Thus, interest earning investments held domestically drove the increase in banks’ as well as other
supervised institutions’ profits during the year under review. Banks’ profits increased by 22.93 per
cent to SCR428.60 million at the end of 2015. Whilst investments increased in the interest bearing
assets, total assets declined rather significantly (by SCR2.80 billion to SCR16.77 billion). This was driven
by lower external assets, further to a reduction in foreign currency denominated deposits liabilities,
from a bank’s closure of offshore clients’ accounts. With declines recorded in liquid assets, liquidity
ratios moved generally downwards, but remained at acceptable levels. On the other hand, net
capitalisation ratio improved.
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The above-mentioned move of that respective bank is reflective of the ‘de-risking’ phenomenon that
has been experienced by a number of developing countries across the world. In the same vein, it will
be recalled that BMI Offshore bank was taken over by CBS late in 2014 when its correspondent banking
relationship was discontinued. In the face of these events, the need to enhance risk management vis-
à-vis money laundering and financing of terrorism risks (ML/FT) has been high on the agenda in recent
years. Correspondingly, CBS received technical assistance that covered supervision of offshore banks,
which recommended an enhanced risk based approach to supervision, incorporating oversight of
ML/TF risks. Furthermore, the country’s commitment to conduct a National Risk Assessment (NRA) on
ML/TF risks represent nationwide effort to evaluate Seychelles’ position and hence identify the areas
for improvement. Formalities for World Bank to assist with the NRA exercise was concluded in 2015.
The preparations for its official launch scheduled for early 2016 were underway late in the year under
review and were led by the Financial Intelligence Unit.
Along this line, there was greater appreciation of the principles of risk based supervision for all risks
and the potential benefits of further integrating risk based elements in the overall supervisory
framework. This furthered CBS’ plans to enhance its risk based supervision framework as well as to
implement additional elements of Basel II which places emphasis on risk management practices
around the capital planning process.
The main regulatory development during the year was passing of amendments to the Credit Union
Act, 2009 in September 2015. The principal objectives of the amendments aims to strengthen the
supervisory power over prudential matters governing credit unions, include provisions for
enforcement action and aligning the Act with international best practices. The amendment allows for
setting of parameters and risk-management requirements that will assist with ensuring the soundness
of the institution.
In addition to the principal aim of promoting the soundness of the financial system, FSSD also
endeavoured to implement development initiatives within the Cabinet approved Financial Sector
Development implementation Plan. Its implementation received a boost towards the end of the third
quarter of 2015 with approval of financing received from two international organisations, namely
Investment Climate Facility for Africa (ICF) and African Development Bank (AfDP). World Bank also
approved to provide technical assistance under the Reimbursable Advisory Service (RAS). Capacity
building visits and procurement process for consultants to support the deliverables were initiated with
the ICF and AfDB funding in the latter part of the year. Under World Bank RAS, technical assistance
started on legal aspects, including on review of the Credit Information System, additional banking
products and on enhancement of consumer protection in the financial services sector.
Consumer protection is recognised in CBS’ strategic plan as important towards ensuring the soundness
of the financial system. Consumers need to expect that their interests will be protected and at the
same time need to know their rights and make sound financial decisions. Thus, financial education
deliverables are also included in the FSDIP. CBS’ membership in the Alliance for Financial Inclusion,
which is a global network of financial policymakers that promotes financial inclusion, is representation
of CBS’ involvement to advance in this area.
The RAS also included technical assistance for the afore-mentioned NRA, given its importance to the
financial sector. Saying this, the authorities remained committed to other engagements related to
international compliance, namely the United States Foreign Account Tax Compliance (FATCA) which
was in principle agreed to in 2014 and signing the Multilateral Convention on Mutual Administrative
Assistance in Tax Matters in February 2015.
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CBS acknowledges the need to remain abreast of international developments directly or indirectly
related to the financial services supervision space, to respond appropriately, aim for compliance and
for the ongoing drive to improve. By working towards promoting the soundness of the financial
system, CBS supports sustainable growth in Seychelles, remaining committed and true to the mission
of the institution.
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ACRONYM
AEOI Automatic Exchange of Information for Tax Purposes
AFI Alliance for Financial Inclusion
AFS Afritac South
AGM Annual General Meeting
AML/CFT Anti-Money Laundering and Counter-Financing of Terrorism
ATM Automated Teller Machine
BAHL Bank Al Habib Limited
BBS Barclays Bank (Seychelles) Limited
BCBS Basel Committee on Bank Supervision
BDC Bureaux de Change
BMIO BMI Offshore
BoB Bank of Baroda
BoC Bank of Ceylon
CBS Central Bank of Seychelles
CIS Credit Information System
CPI Consumer Price Index
CRS Common Reporting Standard
CSD Central Securities Depository
CUs Credit Unions
DAA Deposit Auction Arrangement
DBS Development Bank of Seychelles
DICT Department of Information Communications and Technology
FATCA Foreign Account Taxpayer Compliance Act
FATF Financial Action Task Force
FIA Financial Institutions Act 2004, as amended
FIU Financial Intelligence Unit
FSA Financial Services Authority
FSDIP Financial Sector Development Implementation Plan
FSSD Financial Services Supervision Division
GDP Gross Domestic Product
HBL Habib Bank Limited
HFC Housing Finance Company
ICAAP Internal Capital Adequacy Assessment Process
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ICF Investment Climate Facility for Africa
IFC International Finance Cooperation
IMF International Monetary Fund
MCAA Multilateral Competent Authority Agreement
MCB Mauritius Commercial Bank (Seychelles) Limited
MCM Monetary and Capital Markets
MFTBE Ministry of Finance, Trade and Blue Economy
ML/TF Money Laundering and Terrorist Financing
NBFIs Non-Bank Financial Institutions
NPLs Non-Performing Loans
NRA National Risk Assessment
NTCR Net Tangible Capitalisation Ratio
NVB Nouvobanq
OECD Organisation for Economic Co-operation and Development
PSD Payment Systems Division
RAS Reimbursable Advisory Service
RBS Risk Based Supervision
ROA Return on Asset
ROE Return on Equity
RWCR Risk-weighted Capital Adequacy ratio
SCB Seychelles Commercial Bank
SCU Seychelles Credit Union
SENPA Small Enterprise Promotional Agency
SMEs Small and Medium-sized Enterprises
SREP Supervisory Review Evaluation Process
SCB Seychelles Commercial Bank
TA Technical Assistance
T-bills Treasury Bills
T-bonds Treasury Bonds
TT Telegraphic Transfers
WOCCU World Council of Credit Unions
VAT Value Added Tax
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OVERVIEW OF THE REPORT
The Financial Services Supervision Report provides information on the structure of the financial
sector, the financial position and performance of supervised institutions as well as developments
in the supervisory framework. The report also provides an overview of the functions of FSSD
which is responsible for the supervision of institutions under CBS’ portfolio. The overall aim of
the report is to promote transparency and disclosure of information in the financial system.
The report is organised as follows:
Chapter 1 provides a summary of developments in the macro-economy during the year under review;
Chapter 2 describes the structure of the financial sector;
Chapter 3 provides an overview of the financial position and performance of banks, SCU, DBS and HFC in 2015;
Chapter 4 explains the main developments in the supervisory framework during the year under review.
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CHAPTER 1 – MACRO-ECONOMIC CONDITIONS OVERVIEW
The year 2015 remained a challenging one for the global economy. The shock of lower commodity
prices - particularly oil prices - resulted in some notable slowdown across major commodity
exporters. Across the globe, economic growth and activity continued to be sluggish; overall
productivity was on the low side whilst unemployment level was above historical trends.
Based on IMF projections, global output is estimated to have grown by 3.1 per cent in 2015, which
was 0.3 percentage points lower than 2014 and driven by marked slowdown in emerging market
and developing economies. Other notable challenges were associated with the slowdown in the
Chinese economy and therefore its implication on the rest of the world as well the prevailing
monetary policy stances in the United States and the European Union region and their impact on
global demand.
Nevertheless, having successfully emerged from the challenges experienced in 2014, further
evidence that the basic macro-economic fundamentals of the economy are well anchored to
withstand potential shocks compared to the 2008 pre-crisis period was again evident in 2015.
Given the openness of the country as a small island state, Seychelles also benefited from the
external developments of 2015 since their domestic effects were overall positive. Important of
which was the weak or falling international commodity prices including that of oil which has a
direct impact on other costs such as transportation and utilities. Consequently, the overall value
of imports declined in comparison to the previous year whilst the terms of trade improved in
view that the fall in import prices outweighed that for exports. Moreover, notwithstanding the
generally weak state of the global economy, Seychelles managed to attract a new record in the
annual number of visitors.
Overall, the Seychelles economy is estimated to have grown by 4.35 per cent which was at a
slower pace compared to 6.21 per cent growth in real GDP achieved in 2014. Services remained
the key drivers of growth and the overall outcome reflected the modest increase in the direct
value-added contribution from the tourism sector; an outcome that was consistent with the
concerns expressed over yield although positive growth in activity was recorded. Whilst the
stable domestic currency and depreciation of the Euro may suggest no threat to the country’s
external competitiveness, the weaker Euro had a direct impact on the country’s earnings which
are mostly denominated in Euro whilst most foreign payments continued to be in USD. Based on
preliminary estimates, the direct earnings from the tourism industry, which remained an
important source of the country’s foreign exchange inflows, are estimated at 1.40 per cent lower
than in 2014 in USD terms. This was despite the achieved record growth in visitor arrivals.
With regards to developments in the local foreign exchange market, weaker commodity prices
were insufficient to offset an increase in net outflows relative to 2014, despite weaker demand
for foreign exchange. As a result, the Seychelles’ Rupee depreciated by 56 cents or 4.37 per cent
against the USD on average compared to 2014. Also of note was the strengthening of 218 cents
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against the Euro, albeit with the movement influenced by global weakening of the Euro. Table 1.1
shows the average exchange rates in 2015 compared to the previous year.
Table 1.1: Average Exchange rates
2014 2015 % change
SCR/EUR 16.94 14.76 -12.89%
SCR/USD 12.75 13.31 4.37%
SCR/GBP 20.89 20.28 -2.91%
The reduced domestic demand for foreign exchange created opportunities for the CBS to
accumulate international reserves through purchases from the market. At the end of December,
gross official reserves had grown from USD464 million (3.8 months of imports) in the previous
year to USD536 million (4.9 months of imports). As a result, the country’s external resilience
strengthened further with previous assessments in 2013 by the IMF which concluded that the
level of official reserves were already at “a desirable range”.
Other key indicators in the external sector indicate that preliminary estimates show a reduction
in the current account deficit from 22 per cent of GDP in 2014 to 17 per cent of GDP in 2015. Such
outcome was attributed to the afore-mentioned reduction in the value of imported commodities
which led to an improvement in the trade balance. Moreover, gross inflows of foreign direct
investment remained strong at 19 per cent of GDP, noting that its import-related components are
self-financed.
The weakening of the domestic currency was expected to have a direct correlation with changes
in the general price level. However, based on the annual rate of inflation as measured by the CPI
produced by the National Bureau of Statistics (NBS), the increase in the general price level in 2015
was by 4.04 per cent compared to 1.39 per cent in 2014. It should be noted that the inflation
figures for 2015 were calculated based on a revised CPI basket which incorporated the outcome
of the most recent household budget survey. In addition to the re-basing effect, data coverage
also improved in 2015. To note, the fact that Seychelles relies heavily on foreign goods, the weak
global commodity prices have helped to contain domestic inflationary pressures during 2015.
CBS’ assessment also showed some risks of inflationary pressures at the start of the year. Such
impulses were predicted to originate from the second round effects of the depreciated local
currency experienced towards the end of 2014, and from the high, double digit expansion in
credit to the private sector which reached an annual rate of 25 per cent at the end of 2014. The
strong growth in credit was expected to prolong through 2015 before eventually slowing down
towards the end of the year. Such development followed an increase in disposable income
subsequent to the revision in the salary grid of the public sector coupled with a 20 per cent
increase in minimum wage introduced at the start of 2014. The potential inflationary risk of such
growth in credit was related to the fact that a significant proportion of these facilities were going
towards the financing of consumer goods rather than to the productive sectors.
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Against the above backdrop, the CBS maintained a tight monetary policy up to September in order
not to compromise its primary objective of promoting domestic price stability. Having evaluated
the market conditions in the third quarter, a cautious loosening of monetary policy was effected
as of October. This was after the projected inflation was expected to reach its peak at the end of
the year; a result that took into consideration the stability of the domestic currency whilst no
price pressure was anticipated from imported commodities. Consistently, the annual growth in
credit to the private sector fell to 6.86 per cent in December.
Under the current monetary targeting framework, the tightening of monetary policy involves the
withdrawal of liquidity from the system, which limits the ability of lending institutions to extend
credit and therefore address demand pressures in the foreign exchange market. Through
sustained policy coordination with the MFTBE, securities continued to be issued in support of
monetary policy coupled with the CBS’ interventions in the money market to withdraw liquidity.
This impacted market interest rates whereby, an overall increase was observed. The average
savings rate rose from 2.31 per cent at end-2014 to 2.91 per cent in 2015; its highest level since
August 2013. As for the effective lending rate, the increase over the corresponding period was
from 12.05 per cent to 12.56 per cent which resulted in a slight narrowing of the interest rate
spread. Nevertheless, the spread between the effective lending and savings rate remained close
to 10 per cent and is considered as being on the high side.
On the fiscal front, policies mainly concentrated on the broadening of the tax base, with some key
measures introduced in January including upward revisions in excise and road taxes. There was
also an increase in excise tax on all alcoholic drinks with an alcohol content that exceeds 16 per
cent and that on all tobacco products. This was aimed at discouraging excessive consumption of
these products and reduce the associated adverse effects that these can have on society. In
addition, the mandatory registration threshold of VAT was lowered to a turnover of R2.0 million
which resulted in an increase in the number of VAT registered businesses. As for the budget
outcome, this remained positive in consideration that a surplus was once again achieved and that
was also consistent with the medium-term debt strategy. The primary surplus for 2015 stood at
3.94 per cent of GDP which was a better outcome compared to the targeted 3.50 per cent of GDP.
Additionally, a further reduction in public debt was recorded; from 65 per cent of GDP in 2014 to
60 per cent of GDP in 2015. The other notable policy action during the year was the continuation
of the country’s engagement with the IMF as formalised in the 3-year programme under the
Extended Fund Facility agreed in 2014. The policy focus under the latter was to “reduce the high
debt levels, improve external buffers and sustainability in the face of emergent balance of
payments pressures, and strengthen the economy through sustained and inclusive growth”.
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CHAPTER 2 – OVERVIEW OF THE INDUSTRY AND FSSD
This chapter sets the context of FSSD’s functions, providing an insight of the objectives that influence
and shape the planning and implementation of the division’s activities. It also depicts developments
in the structure of the financial system under CBS’ purview and provides some broad indications of
developments in the financial sector, including in the infrastructure and resources.
2.1 OBJECTIVES
The Central Bank of Seychelles Act, 2004 as amended stipulates that the CBS’ main objective is to
promote price stability. The Act also states other objectives, which include promoting the
soundness of the financial system. CBS has been entrusted with upholding this latter objective,
which it endeavours to achieve through implementation of its strategic objectives.
These objectives are articulated within CBS’ strategic plan for 2014 to 2018. The plan documents
the institution’s vision for these 5 years and establishes key performance indicators to evaluate
progress towards CBS’ vision.
Within the overarching objective of maintaining the soundness of the financial system, the plan
further defines specific objectives, for which those pertaining to FSSD are outlined below:
Ensuring the stability of the financial sector within CBS’ supervisory ambit to be achieved
through effective licensing, Off-Site and On-Site supervision;
Strengthening the regulatory framework by ensuring that the framework is at par with
international best practice. Formulation of the regulatory framework for financial leasing
and promoting its development also contribute towards achievement of this objective;
Enhancing financial services consumer protection through periodic evaluation of the
status quo and establishing the appropriate framework to uphold consumer protection.
Achieving progress in the payment systems and ensuring financial system stability are also
important components towards the overall soundness objective. These are addressed through
the functions of the PSD and the Financial Stability Unit1 respectively within CBS.
1 The Financial Stability Unit was formally established in 2016.
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2.2 THE REGULATORY FRAMEWORK AND SUPERVISED INSTITUTIONS
The constituents of FSSD’s regulatory and supervisory portfolio are illustrated in Chart 2.1.
Chart 2.1: FSSD’s Supervisory Portfolio 2015
As afore-stated, CBS derives its principal powers from the Central Bank of Seychelles Act, 2004 as
amended, which explicitly states its functions related to financial institutions, being banks and
BDC, as defined by the FIA. As was the case in the previous year, there were 9 licensed banks in
operation as at the end of 2015. Although one additional bank had been licensed, its operations
had not commenced by the end of the year. CBS’ supervisory portfolio also entailed 26 BDC of
which, 14 were Class A2 and the other 12 were Class B3.
In addition to these financial institutions, CBS has also been designated as the regulatory
authority of SCU4 and assigned oversight responsibility over DBS5 and HFC6. DBS and HFC are
supervised in line with certain relevant provisions of the FIA. CBS has the intention of
strengthening its regulatory functions vis-à-vis the afore-mentioned non-bank institutions
through a consolidated regulatory framework that would cover the existing or any other non-
bank institutions in the financial sector that may be brought within CBS’ ambit in the future. Refer
to section 4.3.8 for an overview on this endeavour.
2 A class A bureau de change is licensed to buy and sell foreign currency in the form of notes, coins,
traveller’s cheques and also engage in money transmission. 3 A class B bureau de change is licensed to buy and sell foreign currency in the form of notes, coins and
traveller’s cheques only. 4 Through the Credit Union (Designation of Authority) Notice, 2009. 5 Through the Delegation of Statutory Functions (DBS Decree) Order, 2009. 6 Its responsible Ministry officially delegated the oversight of HFC’s credit granting function to CBS in 2009.
Banks BDC
Class A
Class B
Other Financial Institutions
SCU
DBS
HFC
Financial Leasing
Institutions
Non-deposit taking Financial
Leasing Institutions
Deposit-taking Financial Leasing
Institutions
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The enabling legislations for the supervised institutions are outlined in Table 2.1. Apart from SCU
and DBS, the supervised institutions are incorporated under the Companies Ordinance, 1972 and
hence also need to comply with the said law (unless explicitly exempted from certain provisions
by law). Of note, CUs may be established by Order published in the Gazette by the Minister for
Finance and DBS is a body corporate established by statute. The Companies Ordinance, 1972 is
HFC’s primary governing law.
Table 2.1: Main enabling legislations for supervised institutions
Institutions Main Legislation7
Banks FIA
National Payment System Act,
2014 (licence for Class A BDC
and approval for banks (in
relation to payment services))
BDC
Financial Leasing Institutions Financial Leasing Act, 2013
SCU Credit Union Act 2009, as
amended
DBS Development Bank of
Seychelles Decree, 1977
As for financial leasing institutions, whilst the relevant Act was promulgated in November 2013,
work was ongoing during 2015 on the necessary regulations and processes that would render the
regulatory and supervisory framework for financial leasing complete. In view of this, CBS had not
started to process licence applications from prospective financial leasing institutions as at year
end. Section 4.3.1 elaborates on work that was undertaken during the year in this regard.
The main regulatory development that occurred in 2015 pertained to the amendment of the
Credit Union Act, 2009 which materialised in September 2015. This is discussed at section 4.2.1
of the report. Furthermore, the requirements of the National Payment System (Licensing and
Authorisation) Regulations, 2014 in relation to Class A BDC and banks were operationalised
during the year under review and is discussed at section 4.2.3 of the report.
2.3 SUPERVISORY STRUCTURE AND FUNCTION
FSSD is organised into three Units, namely Policy, On-Site and Off-Site, whose functions are
distinct but intertwined towards the common objective of promoting the soundness of the
financial system.
The main functions of the 3 units are summarised in Table 2.2:
7 Legislations can be accessed on CBS website at www.cbs.sc
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Table 2.2: Summary of FSSD’s supervisory functions
Policy Unit Off-Site Unit On-Site Unit
Process licence applications in line with the relevant laws
Conduct research and make recommendations to amend or review legislations and other pronouncements
Administer complaints on supervised institutions
Process applications as required by the law, including for appointment of administrators, shareholders, auditors, etc.
Attend to other policy and regulatory issues
Compile financial soundness indicators
Conduct analysis based on periodic returns and annual business plans
Perform stress tests on supervised institutions on a regular basis aimed at identifying weaknesses in the financial system
Review audited statements
Conduct regular full-scope On-Site examinations of supervised institutions in line with the supervisory plan
Conduct focussed On-Site examination in response to a supervisory issue of concern
Monitor adherence to recommendations of examination reports and take appropriate actions
Monitor and enforce compliance to the regulatory framework
Identify risks and take measures to ensure that risks are appropriately managed or mitigated
FSSD seeks to adopt a risk based approach to supervision, which identifies and concentrates on
the risky areas in an institution and on understanding the adequacy of supervised institutions’
risk management systems. The division appreciates that there has been a world-wide evolution
of RBS and recognises that, whilst there are RBS elements in its CAMELS8 based approach, this
requires further enhancement in order to derive the full benefits of RBS.
RBS breaks away from the traditional compliance-based approach, which may lead to too much
focus on non-compliance and inadequate understanding of the institution and its risk
management practices. Rather than adopting a common supervisory approach for all banks, RBS
allows for prioritisation of resources to institutions and areas with higher risk profiles. RBS is
also more forward looking by identifying risks that may emerge in the future. Compliance remains
important in order to ensure adherence with minimum requirements, and whilst it still needs to
be incorporated within the supervisory regime, the ultimate objective of RBS should be on
identifying and managing risks. Section 4.3.5 discusses the RBS concept further.
During the year under review, FSSD intensified work in the area. Specifically, two technical
assistance missions from AFS in 2015 covered RBS and made recommendations for FSSD to move
further in this direction as discussed at section 4.3.3.1.
The afore-mentioned missions also addressed ML/TF risks, on which there has been heightened
attention. This has in part resulted from increased scrutiny and regulatory requirements by
international organisations in the area and the de-risking phenomenon, whereby financial
8 A uniform bank rating system that assesses Capital Adequacy, Asset quality, Management, Earnings,
Liquidity and Sensitivity to market risk.
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institutions have been exiting relationships with clients perceived to be “high-risk”. In Seychelles,
this was manifested in BMIO’s loss of correspondent banking relationship in late 2014, further to
which it was taken over by CBS. In the second half of 2015, a bank also closed accounts of its
offshore clients further to a remediation exercise which led the bank to determine that the said
clients did not fit within its risk profile.
The On-Site supervisory activities of FSSD in 2015 sought to address the prevailing concerns in
the financial sector. In addition to one full-scope examination that was undertaken, limited scope
examinations were conducted on four banks. These limited scope inspections were aimed at
assessing banks’ risk management practices with respect to ML/TF activities. The relevant
development in this area, both at CBS and national levels are discussed at section 4.3.3 of the
report.
Furthermore, in order to add another dimension to the work undertaken by FSSD, which is largely
institutional oriented and micro-prudential in nature, work on promoting macro-prudential
supervision was underway in 2015. Macro-prudential supervision allows for assessment of the
interconnections amongst financial institutions and the macro-economy, and adds to the forward
looking aspect of supervision. Macro-prudential supervision contributes to preventing the
macro-economic costs of systemic financial distress and maintaining financial stability. FSSD
conducted research work that made recommendations with regards to formulation of a financial
stability framework at CBS during the year under review. Although the function would be
separate from FSSD, interactions and engagements between the micro and macro-prudential
supervision functions are anticipated in order to contribute to more accurate assessments of risks
and appropriate responses towards the financial soundness and stability objectives.
2.4 THE BANKING SECTOR
There were 9 banks operating in Seychelles as at the end of 2015. A new bank, United Helvetic
Bank, was licensed during the year but had not started its operations as at year end. Two banking
licence applications were still pending by year end.
The licensed banks along with their commencement history are shown in Table 2.3.
15 | P a g e
Table 2.3: Banks and year in which operations started
Banks Year in which operations started
BAHL 2014
BoB 1978
BoC 2014
BMIO9 2008
BBS 1959
HBL 1976
MCB 2003 and took over assets of Banque
Francaise Commercial Ocean Indien which
has started in 1978
NVB 1991
SCB 1981 as Seychelles Savings Bank, rebranded
in 2013
UHB Had not yet started operations in 2015
Since November 2014, BMIO had been taken over by CBS, further to its inability to restore
correspondent banking services when this was discontinued. The bank remained under CBS’
control throughout 2015 while it was undergoing reorganisation by an agent that was appointed
by CBS during the year. Section 4.4 provides more details on BMIO’s reorganisation plan.
Banks in Seychelles operate under a single licensing regime, whereby they can conduct both
onshore and international banking services. The banks may segment the activities, whereby those
activities that give rise to ‘foreign sourced income’ are termed Segment 1 and all other banking
activities are Segment 2. The regime became effective with amendments to the FIA promulgated
in 2011, which eliminated the requirement for a separate banking licence to conduct solely
offshore banking business.
2.4.1 OWNERSHIP OF BANKS
Chart 2.2 illustrates the ownership of banks in 2015. The two local banks, NVB and SCB were
majority owned by the Government. The Government plans to pursue its targeted 40 per cent sale
of total shares of SCB to account holders in 2016, a process which began in 2011 when 23.45 per
cent shares were subscribed.
9 BMIO’s ownership structure changed in 2016 and has been rebranded to Al Salam Bank (Seychelles) Ltd.
16 | P a g e
Chart 2.2 Shareholdings of Banks
2.4.2 BRANCH NETWORKS
Table 2.4 shows the distribution of banks’ branches across the three main islands of the country.
An additional branch was opened on Mahe at the Eden Plaza during the year. Appendix 1 provides
a list of the location of banks’ branches and contact details. Branch networks contribute to the
access dimension of financial inclusion. As shown in Appendix 1, there is quite an even
distribution in the locations of branches across the islands. Given Seychelles’ smallness, access
distance-wise is not expected to be a significant issue in the country.
Table 2.4: Number of Branches
2015 Mahe Praslin La Digue Total
BAH 1 0 0 1
BoC 1 0 0 1
BBS 5 2 1 8
BoB 1 0 0 1
BMIO 1 0 0 1
HBL 1 0 0 1
MCB 4 2 1 7
NVB 3 1 1 5
SCB 3 1 1 5
2.4.3 DEBIT CARDS, ATM NETWORKS, POS TERMINALS AND INTERNET BANKING
The national payment systems is regulated in line with the National Payment System Act, 2014
by the PSD within CBS. The enhancement of public confidence in payment systems is related to
17 | P a g e
CBS’ strategic objective of promoting financial soundness, including consumer protection. In
addition to the PSD’s endeavours to modernise the payment systems, it is also engaged in work
to uphold the consumer protection aspect of payment systems, including in developing the
appropriate regulatory framework in this regard. As explained at section 4.2.3, the approval
requirement for payment services (applicable to banks), implemented in 2015, is also a key
development aimed at promoting the soundness of the payment system.
In enhancing public confidence, PSD seeks to encourage the use of payment systems. The
statistics for 2015 continued to indicate progress in relation to access and usage of payment
systems.
Table 2.5 illustrates the number of banks’ ATMs across the three main islands, whereby one
additional ATM was installed by MCB during the year under review. Appendix 2 provides the
locations of the ATMs.
Table 2.5: Number of ATMs in 2015
2015
Mahe Praslin La Digue Total
BBS 12 3 1 16
MCB 11 3 1 15
NVB 8 1 1 10
SCB 5 1 1 7
Total 36 8 4 48
Table 2.6 also shows an increase in the number of debit cards and POS terminals during the year
under review.
Table 2.6: Number of debit cards and POS terminals
2013 2014 2015
Number of debit
cards
60,965 64,303 66,209
Number of POS
terminals
1,890 2,057 2,220
As regards usage, the number of ATM transactions that were conducted in 2015 rose by 17.46
per cent (to 2.30 million) and the value of transactions at ATMs amounted to SCR2.73 billion
having increased by 22 per cent.
Usage of POS increased by 26.34 per cent (to 1.62 million) with transaction value augmenting by
15 per cent (to SCR2.84 billion). This is illustrated in Chart 2.3.
18 | P a g e
Chart 2.3: Number of POS transactions and ATMs and Value of POS and ATM transactions
Credit cards, although still in low penetration, have gained popularity in recent years and are
offered by BBS, MCB and NVB. In 2015, payment cards were principally of international brands,
mainly VISA and MasterCard and partial interoperability existed on the ATM and POS networks.
Whilst all Visa debit cards were accepted at every ATM and POS terminals, other debit cards such
as maestro and cirrus, were only accepted at some ATMs.
With regards to internet banking, during 2015, 5 banks were offering these services, notably BBS,
BoB, BMIO, MCB and NVB. Out of these, BBS, MCB and NVB were offering both transaction-based
and view-based internet banking service to their clients as at the end of the year.
Another innovation in payment systems which is still relatively new in Seychelles is mobile
banking, which is offered by BBS and MCB. This is a system whereby customers of a financial
institution are able to conduct a number of financial transactions through a mobile device for
example, smartphones, tablets etc. using a dedicated software or SMS.
As regards mobile payments, this officially commenced in 2015, whereby Airtel Mobile
Commerce (Seychelles) was issued with a payment service provider licence under the National
Payment System Act, 2014 to provide mobile payment services. Airtel Money is essentially a
mobile application through which customers undertake financial transactions using their mobile
phone, subject to cash being deposited in their accounts. Payment through the medium can be
used to pay utility bills at the Public Utilities Corporation, and some retail shops.
0
500
1,000
1,500
2,000
2,500
0
500
1,000
1,500
2,000
2,500
3,000
2013 2014 2015
Th
ou
san
ds
SCR
mil
lio
ns
Value of Transactions (LHS) POS Value of Transactions (LHS) ATM
Number of Transactions (RHS) POS Number of Transactions (RHS) ATM
19 | P a g e
2.4.4 EMPLOYEES
There was a slight decrease in the number of employees in the banking sector, from 667 in 2014 to 664 in 2015. The majority of the employees in the banking sector are Seychellois (95.5 per cent) as illustrated in Table 2.7.
Table 2.7: Employees in the banking sector
2013 2014 2015
Locals Expatriates Locals Expatriates Locals Expatriates
BBS 216 4 192 7 196 9
MCB 162 6 170 6 161 5
NVB 125 4 123 4 127 4
SCB 98 0 96 0 103 0
BoB 16 3 17 3 15 3
BMIO 24 1 21 1 13 1
HBL 10 2 11 2 11 2
BOC 0 0 7 3 8 3
BAHL 0 0 0 4 0 3
Total 651 20 637 30 634 30
The FSDIP recognises the importance of ongoing training of financial sector professionals to the
development of the financial sector. Towards this, there is a plan to conduct a survey to identify
the key gaps in training and overall capacity of individuals working in the financial sector, with
the aim of informing an education program to groom individuals working or envisaging to work
in the financial sector.
2.4.5 COMPLAINTS STATISTICS
CBS’ strategic plan recognises the importance of consumer protection to financial soundness and
CBS is resolute to enhance this area in the financial sector. The initiatives relating to consumer
protection in the financial sector is addressed at length at section 4.3.6 of the report.
A measure in relation to consumer protection is the Financial Institutions (Complaints Handling)
Regulations, 2008. This requires banks to have in place effective and transparent procedures for
complaints resolution. The Regulations state that complainants may require that the complaints
be escalated to CBS10, if he/she is not satisfied with the response provided by the institution.
The statistics on complaints that were escalated to CBS during 2015 showed an increase
compared to 201611. Whilst 11 complaints related to FSSD were escalated to CBS in 2014, the year
under review registered 22 complaints. The nature of complaints varied, but some were related
10 The institution has 21 days to attempt to resolve the complaint. Where this is not possible, they are
required to inform the client of the reason why they have been unable to offer a final response and when they can expect to do so.
11 The report for 2014 did not report complaints received by PSD compared to this year.
20 | P a g e
to certain banks’ remediation process as well as other general customer service issues.
Additionally, PSD received 20 complaints which were mainly related to fraudulent or
unauthorised transactions.
In addition to the findings of the baseline survey on financial literacy12, the information on
complaints will assist in the formulation of a national strategy on financial education, on which
work is expected to start in the third quarter of 2016.
2.4.6 ABANDONED PROPERTY
The FIA provides for the administration of abandoned property, which are clients’ funds or other
property with banks for which there have been no transaction or written correspondence by or
from the client for a period of at least 10 years.
Banks are required to notify clients of abandoned property in writing and through publication in
a local newspaper. All unclaimed property needs to be transferred to CBS in the eleventh year
where the funds are kept in non-interest bearing accounts and contents of safe deposit boxes are
maintained in the vault. Rightful claims for the transferred property are entertained.
Banks may have their own internal policies for accounts for which there have been no transaction
or correspondence for a period of less than 10 years whereby these are classified as dormant. In
Seychelles this ranges between 6 months to 2 years. The Financial Institutions (Bank Charges and
Fees) Regulations, 2013 state that there shall be no charges and fees payable by a person to a
bank for the maintenance of dormant account.
CBS maintains accounts denominated in USD, EUR and GBP for abandoned funds denominated in
foreign currencies. Abandoned funds denominated in any other currencies have to be converted
by the banks into one of these three currencies prior to the transfer to CBS. Table 2.8 shows the
movements in the abandoned property accounts and the balance as at the end of 2015.
Table 2.8: Balance of abandoned property accounts
2.5 BUREAUX DE CHANGE
Two new Class A licences were issued in 2015, such that the number of BDC stood at 26 at the
end of the year. The branches and contact details of BDC are shown in Appendix 3. In view that
12 The survey was conducted in the first half of 2016 and the findings are expected in August 2016.
2015 opening
balance
Transferred to
CBS in 2015
Refunded to
banks in 2015
2015 closing
balance
SCR 17,239,306.29 3,323,719.25 124,410.21 20,438,615.33
USD 172,915.05 376,513.50 1,980.00 547,448.55
EUR 11,084.86 14,483.13 0 25,567.99
GBP 2,575.04 4,544.53 0 7,119.57
21 | P a g e
Class A BDC undertake remittances, it is classified as a payment service provider under the
National Payment System Act, 2014. In 2015, the associated Licensing and Authorisation
Regulations, 2014 were implemented in relation to Class A BDC. Essentially, the licensing
requirements therein, in addition to those within the FIA, needed to be adhered to as part of the
licensing process. Existing Class A BDC were required to submit documentation to PSD in line
with the afore-stated Regulations and satisfy requirements for a payment services provider
licence to engage in money remittance activities to be issued. This is further discussed at section
4.2.3.
Chart 2.4 illustrates the volume of foreign currency transactions handled by BDC vis-à-vis those
that went through banks between 2013 and 2015. On the aggregate, the volume of transactions
handled by BDC increased by 5.53 per cent in 2015, although at a lower rate compared to the 9.92
per cent increase in 2014. As shown in Chart 2.5, TT transfers remained the bulk of BDC’
transactions in terms of volume, which influenced the increase in volume since transactions in
notes declined by 5.08 per cent between 2014 and 2015. At the market level, however, most notes
transactions continued to be handled by BDC representing 77.22 per cent of the total notes
transactions reported by the market in 2015.
Whilst BDC transactions increased, it is noted that the opposite happened in the banking sector,
such that there was an overall decline in foreign currency transactions of 7.46 per cent during the
year under review. This was due to relatively lower demand for foreign currency during the year
under review. This was attributed largely to lower international commodity prices in 2015, which
translated into a reduced overall value of imports.
Chart 2.4: Volume of Foreign Currency Transactions
-
2
4
6
8
10
12
2013 2014 2015 2013 2014 2015
BDCs Banks
Notes 1,140,802.18 1,225,797.80 1,163,531.11 334,298.25 334,628.40 343,191.08
TT 2,914,607.50 3,232,006.50 3,540,771.82 9,157,262.77 10,429,813.2 9,038,758.55
SCR
Mill
ion
s
22 | P a g e
2.6 CREDIT INFORMATION SYSTEM
The CIS is enabled by the Credit Information Systems, Regulations which were issued in 2012 and
amended in 2014. It collects information on credit of clients of participating institutions, being
banks, DBS, HFC and SCU and provides an indication of the indebtedness and creditworthiness of
clients. The participating institutions are required to consult the CIS when processing any
applications for credit. CIS supports banks’ credit risk management and promotes financial
discipline, which assists in ascertaining the soundness of the financial system.
There has been an increase in total enquiries in the CIS between 2013 and 2015 as shown in Table
2.9. It is noted that the 2014 amendments, amongst other things, provided for inquiries to be
prompted by clients through their banks. Prior to this, banks could only check the CIS if the clients
were applying for a credit or to guarantee a credit. Other amendments in 2014 included the
provisions for same day updates to be made in the CIS to improve accuracy and extension of the
retention period of both positive and negative information to five years on the CIS.
Table 2.9: Inquiries in the CIS
Inquiries 2013 17,106 2014 22,638 2015 26,970
In 2015, there has been initiatives to continue improving the effectiveness and efficiency of the
CIS. This has been in conjunction with the DICT for the technological aspect. On the legal side,
World Bank under the RAS, has been assisting with work to formulate a new Credit Reporting Act.
More details are provided at section 4.3.7 of the report.
Chart 2.5: Notes and TT market share
23 | P a g e
CHAPTER 3 - FINANCIAL ANALYSIS
An important component of supervision is financial analysis of supervised institutions’ positions and
performance. This provides an indication of the health of the financial sector and assists in
understanding the implications of economic developments on the institutions’ books. The
performance of the banking sector is explored substantively, followed by an overview of the
financials for SCU, DBS and HFC.
3.1 OVERVIEW OF THE BANKING SECTOR
This section gives a comprehensive overview of the banking sector’s financial position and
performance for the year 2015 with a comparative analysis from the year 201413. The data and
explanations provided in this chapter are principally based on audited figures submitted to FSSD.
Nonetheless, unaudited figures have been used on a consolidated basis in instances where
audited figures are not reported.
3.1.1 ASSETS, LIABILITIES AND EQUITY
For the year under review, the industry’s asset base recorded a significant drop of SCR2.80 billion
or 14.31 per cent. Conversely the banking sector’s equity capital grew by SCR123.43 million. The
industry’s total assets, total liabilities and equity capital settled at SCR16.77 billion, SCR15.02
billion and SCR1.75 billion respectively at the end of 2015. These balance sheet items are
illustrated in Chart 3.1.
13 Data for the year 2013 have also been included for illustrative purposes.
24 | P a g e
Chart 3.1: Assets, liabilities and equity
3.1.1.1 TOTAL ASSETS
The drop of SCR2.80 billion observed in the industry’s asset base in 2015 was attributed to a
decrease of SCR4.14 billion in external assets14, with the latter recording the lowest balance
during the past five years. However, all the other components of total assets recorded growth
during the year 2015, with the most significant increase observed in loans and advances
amounting to SCR515.41 million. This was followed by balances with CBS and amounts due from
financial institutions then investments in Government securities, which rose by SCR392.14
million and SCR281.21 million respectively.
14 Includes balances due from financial institutions abroad, securities, foreign currency (notes and coins),
foreign bills purchased and discounted and other investments in foreign currency.
-
5
10
15
20
25
2013 2014 2015
SC
R b
illi
on
s
Total Assets Total Liabilities Total Equity
25 | P a g e
Chart 3.2: Composition of total assets
EXTERNAL ASSETS
External assets declined considerably by SCR4.14 billion (equivalent to 47.06 per cent), from
SCR8.789 billion in 2014 to rest at SCR4.65 billion in the year under review. This compared to a
growth of SCR596.15 million in 2014. The development was primarily driven by a bank’s move
to close accounts in its offshore banking segment, prompted by the results of a remediation
exercise which the bank had undertaken on the clients. From the outcome, the bank had
determined that the level of risk in this business segment was inconsistent with its risk appetite.
Consequently, there was a significant decline in the bank’s deposits denominated in foreign
currency, reducing the funding available for investment in foreign currency denominated assets.
The appreciation of the domestic currency against the Euro and Pound sterling, especially relative
to the former foreign currency also contributed to the fall in external assets. Consequently, unlike
the previous years where external assets had been the dominant constituent of total assets, it
became the second largest component of total assets in 2015. The item represented 27.74 per
cent of total assets in the year under review, compared to 44.90 per cent in 2014. Chart 3.3 shows
the breakdown of external assets.
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2013 2014 2015
SC
R m
llio
ns
External assets
Loans & advances
Balances with CBS &amounts due from financialinstitutions
Investments in Governmentsecurities
Other assets
26 | P a g e
Chart 3.3: Breakdown of external assets
As observed in Chart 3.3, the most remarkable decline in external assets was seen in balances due
from financial institutions abroad, which fell by SCR2.74 million between 2014 and 2015. As for
securities and other investments, this declined by SCR1.43 million to settle at SCR1.87 million at
the end of the year 2015.
LOANS AND ADVANCES15
Loans and advances grew by SCR515.41 million to reach SCR5.85 billion at the end of 2015. This
represented an increase of 9.66 per cent, which is a slower growth rate compared to 18.03 per
cent in 2014. To recall, the double digit growth in 2014 had been attributed to an increase in
disposable income following a revision in the salary structure coupled with the 20 per cent rise
in minimum wages at the start of 2014. Owing to the consumption oriented nature of many of the
loan facilities, CBS was cautious of the potential inflationary risk associated with such credit in
2015. CBS expected that credit would grow for the first half of 2015, which is corroborated by the
significant amount of commitment outstanding (SCR674.37 million worth of undrawn overdraft
and loan facilities16) as at the end 2014. This expectation contributed to the tight monetary policy
stance that was adopted by CBS for the most part of 2015 and this had a bearing on the afore-
mentioned slowdown in credit. At the end of the year under review, loans and advances
accounted for 34.87 per cent of the banking industry’s asset base, and by virtue of the significant
fall in external assets, represented the largest component.
The growth in the industry’s loan portfolio was observed in all of the loan categories, as illustrated
in Chart 3.4.
15 Figures and explanations relating to the composition of loans and advances are based on unaudited
figures. 16 Facilities that have been approved by the banks but are yet to be disbursed.
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2013 2014 2015
SC
R m
illi
on
s Balances due from financialinstitutions abroad
Securities and otherinvestments
Other external assets
External assets
27 | P a g e
Chart 3.4: Breakdown of loans and advances
Term loans remained the largest constituent of the industry’s loan portfolio, representing 54.77
per cent of total loans and advances by the end of 2015. A growth of SCR99.63 million was
recorded in these loans from 2014 to 2015, causing the item to settle at SCR3.21 billion by the
end of the review period. This increase is much lower compared to the previous year, whereby a
rise of SCR352.46 million was observed. As regards to the average yield on term loans in 2015,
this was reported at 12.17 per cent compared to 10.15 per cent by the end of 2014. To note that
both outcomes are consistent with the monetary policy stance that had been taken by CBS.
‘Other’ loans, which comprised mostly of credits denominated in foreign currency, was the second
largest component of the industry’s total loans and advances as at the end of 2015. The proportion
of foreign currency denominated loans to total loans and advances increased by 3.09 percentage
points from 25.48 per cent to 28.57 per cent in 2015. In absolute terms, this item grew by
SCR316.36 million, to settle at SCR1.68 billion by the end of the review period. It is noted that the
highest growth was recorded in this type of credit which was attributed to disbursement of new
facilities during the period. In effect, loans denominated in foreign currency increased from
USD97.05 million (equivalent to SCR1.36 billion17) in 2014 to USD127.72 million (equivalent to
SCR1.68 billion18) by the end of 2015. Another underlying factor for the increase in this asset
could be associated with depreciation of the Seychelles Rupee against the Euro observed in 2015,
which may have also driven increases in loans denominated in the said foreign currency. To note
that a significant amount of loans denominated in Euro was granted to public entities, during the
year under review. Moreover, it is cheaper to borrow in foreign currency rather than in local
currency (provided borrowers are earning income in foreign currency), to which might have
resulted in increase in ‘other’ loans.
As regards to overdraft and mortgage loans, these items increased by SCR91.24 million (to
SCR474.73 million) and SCR22.30 million (to SCR502.99 million) respectively, from 2014 to
2015. As a percentage of total loans and advances, overdrafts represented 8.09 per cent and
mortgage loans accounted for 8.57 per cent by the end of 2015.
17 Reference mid-rate as at December 31, 2014 1USD = SCR14.0147 18 Reference mid-rate as at December 31, 2015 1USD = SCR13.1258
-
500
1,000
1,500
2,000
2,500
3,000
3,500
2013 2014 2015
SC
R m
illi
on
s
Overdrafts Term loans Mortgage loans Other loans
28 | P a g e
BALANCES WITH CBS AND AMOUNTS DUE FROM FINANCIAL INSTITUTIONS
At SCR2.67 billion, balances with CBS and amounts due from financial institutions constituted
15.94 per cent of total assets as at the end of 2015. This component of total assets observed a
growth of SCR392.14 million equivalent to 17.19 per cent, driven largely by increases in balances
with CBS, which in turn was due to banks’ increased investment in DAA. DAA remained the main
open market operations instrument used during the year to absorb liquidity from the financial
system consistent with the tightening stance that prevailed for the most part of 2015. Of note,
banks earned relatively higher interest on DAA during the year under review19.
Another component of balances with CBS comprise of statutory reserve with CBS, a reserve
maintained in accordance with section 31(1) of the CBS Act. The minimum required reserve
under this section of the said Act to maintain is based on a percentage (13 per cent in 2015) of
residents’ deposit liabilities, irrespective of the currency. Although a decline was noted in the
industry’s deposit liabilities during the review period, such observation was in non-residents
deposits as opposed to residents deposits. From 2014 to 2015, balances with CBS recorded an
upward trend, albeit at a lower scale compared to investment in DAA.
INVESTMENT IN GOVERNMENT SECURITIES
Investment in Government securities increased by 11.27 per cent in 2015, to settle at SCR2.78
billion at the end of the year. The item represented 16.56 per cent of the industry’s total assets,
compared to 12.75 per cent in 2014. Growth in Government securities was mainly attributed to
the issuance of T-bills during the year, with banks’ holdings of T-bills increasing by SCR282.15
million or 15.65 per cent from the previous year. It is noted that CBS and the MFTBE, maintained
policy co-ordination in 2015 such that government securities continued to be issued in support
of monetary policy. In the year, short term Government securities were issued to absorb liquidity
from the system20. The yield on Government securities was also higher across all three maturities,
as elaborated at section 3.1.4.2.
During the year the Government did not issue new T-bonds. In effect, the outstanding balance of
T-bonds declined by 0.14 per cent, reflecting the maturities in these securities during the year
under review. As for Government stocks, a marginal increase of SCR0.02 million was observed
from 2014 to 2015, which was due to interest accrued on these assets.
19 At the end of 2015 interest rate on 7 day DAA was 4.02 per cent compared to 3.50 per cent end 2014. At
the end of 2015, 28 day DAA earned interest of 6.50 per cent whilst 14 day DAA was at 3.55 per cent at end 2014.
20 The stock of T- Bills that had been issued for monetary policy purposes by MFTBE as at December 2015 stood at SCR1.56 billion vis-à-vis total stock of outstanding T-Bills of SCR2.86 billion.
29 | P a g e
Chart 3.5: Breakdown of investments in Government securities
3.1.1.2 TOTAL LIABILITIES
Total liabilities as a percentage of total assets declined by 2.12 percentage points to 89.57 per
cent between 2014 and 2015. Similarly, deposit liabilities to total liabilities dropped by 2.40
percentage points at 93.32 per cent during that period. Given developments in the afore-
mentioned indicators, whilst deposits clearly remained the main source of funding, the allotment
of total deposits to total assets stood at 83.58 per cent as at the end of the review period compared
to 87.76 per cent in 2014.
-
500
1,000
1,500
2,000
2,500
2013 2014 2015
SC
R m
illi
on
s
Treasury bills Treasury bonds Government stock
30 | P a g e
Chart 3.6: Total liabilities and total deposits
Total liabilities recorded a decline of SCR2.92 billion or 16.29 per cent to stand at SCR15.02 billion
by the end of 2015. The decline in this item was due to a drop in the industry’s total deposits
(from SCR17.18 billion to SCR14.02 billion) following a decline observed in checkable deposits,
primarily those denominated in foreign currency. This drop in the industry’s deposit base was
mainly associated with the closure of foreign currency denominated accounts by one bank during
the year 2015.
At the end of the year under review, checkable deposits had declined by SCR2.47 billion to stand
at SCR9.07 billion. Time deposits declined by SCR1.05 billion to settle at SCR2.32 billion, which
was primarily driven by the maturity of deposits at one bank. As regards to savings deposits, this
item increased by SCR378.96 million and stood at SCR2.62 billion by the end of 2015.
Based on unaudited figures, average cost of time deposits was more favourable in 2015 than that
in 2014. This item grew by 1.43 percentage points to settle at 3.34 per cent by the review period.
Similarly, average cost of savings deposits recorded an increase of 0.47 per cent to stand at 2.08
per cent by the end of 2015. As at the end of 2015, average cost of ‘other’ deposits and average
cost of checkable deposits stood at 0.82 per cent and 0.04 per cent respectively.
As at the end of the review period, current, time and savings deposits denoted 64.66 per cent,
16.55 per cent and 18.68 per cent respectively of total deposits. ‘Other’ deposits accounted for
only 0.11 per cent of the industry’s total deposits as at the end of 2015.
16,941 17,948
15,025 16,039
17,179
14,020
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2013 2014 2015
SC
R m
illi
on
s
Current deposits
Time deposits
Savings deposits
Other deposits
Total liabilities
Total deposits
31 | P a g e
3.1.1.3 EQUITY
Equity capital21 grew by SCR123.43 million from 2014 to 2015 to settle at SCR1.75 billion,
representing a growth of 7.59 per cent. This was largely attributed to the industry’s net profit
after tax of SCR428.60 million recorded for 2015. It should be noted that the dividend payments
which were effected at year end, reduced the amount transferred to retained earnings. Other
components of equity capital which comprised of statutory reserve fund and ‘other reserves22’,
observed increases of SCR3.01 million and SCR0.75 million, respectively. As at the end of 2015,
equity capital represented 10.43 per cent of the industry’s total assets.
3.1.2 CAPITAL ADEQUACY23
The main regulatory metrics for capital adequacy, which gauge the extent of capital coverage over
assets and indicate banks’ ability to buffer against losses, are shown in Table 3.1. Banks are also
required to maintain minimum unimpaired paid-up capital of SCR20 million.
Table 3.1: Main regulatory requirements relating to capital
Legislation Requirement/Ratio Limit Minimum capital adequacy
ratio (capital base to risk-adjusted assets)
12 per cent
Minimum core capital ratio (tier 1 capital to risk-adjusted assets)
6 per cent
During the year 2015, all banks were in compliance with the above requirements. Chart 3.7
illustrates the notable increases observed in the main capital adequacy indicators monitored by
FSSD between 2014 and 2015. The rise observed in the ratios was driven by the significant drop
in risk-weighted assets combined with the increase reported in the industry’s regulatory capital.
Specifically, the capital adequacy ratio increased by 5.95 percentage points from the previous
year to settle at 25.46 per cent at the end of December 2015. As for the minimum core capital
ratio, this increased by 3.33 percentage points and stood at 18.10 per cent at the end of the review
period.
The performance of both components of the capital adequacy ratios during the year 2015 are
discussed further in sub-sections 3.1.2.1 and 3.1.2.2.
21 Comprises of paid-up capital, statutory reserve fund (in accordance with section 24 of the FIA), other
reserves and retained profit or loss. 22 Other reserves include fair value reserves, revaluation reserves, translation reserves and equity settled
employee benefits reserves. 23 Figures for this section are based on unaudited figures.
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3.1.2.1 CAPITAL BASE24
The industry’s regulatory capital increased from SCR1.68 billion as at December 2014 to SCR1.87
billion as at same period in 2015, representing an increase of 11.46 per cent which amounted to
SCR192.04 million. Similar to previous years, the main component of capital base continued to be
tier 1 capital which accounted for 71.11 per cent of the item, indicating a robust capital base.
However, the increase in regulatory capital was driven primarily by tier 2 capital25 (by SCR132.82
million), namely in year-to-date net profit after tax (by SCR126.48 million). To note that the
regulatory capital is made up of tier 1 capital and tier 2 capital, of which the former is of a more
permanent nature compared to tier 2 capital. Tier 1 capital comprise primarily of unimpaired
ordinary paid-up share capital (or assigned capital in the case of a foreign bank), statutory
Reserve Fund established and maintained pursuant to section 24 of the FIA and retained profits
or loss brought forward from the previous financial year. Tier 2 capital consists of year to date
net profit after tax, hybrid capital instruments, subordinated debt and general provisions.
3.1.2.2 TOTAL RISK-ADJUSTED ASSETS
The industry’s risk-adjusted assets was driven by high decreases in the 20 per cent and 100 per
cent risk buckets amounting to SCR642.32 million and SCR677.24 million respectively. The drop
in the latter was mainly driven by the maturity of one bank’s investment. Banks’ placements
denominated in foreign currency represented the bulk of assets in the 20 per cent risk bucket. It
is worth noting that the drop in the 20 per cent risk bucket was driven by the strategic move of a
bank to close accounts in its offshore banking business portfolio.
3.1.2.3 NET TANGIBLE CAPITALISATION RATIO
For a more prudent assessment, FSSD also assesses banks’ net tangible capitalisation ratio26,
which essentially weights all banks’ assets in the 100 per cent risk bucket. A growth of 2.65
percentage points was noted, to settle at 11.19 per cent for the month ending December 2015.
This trend was due primarily to a drop in net asset base27 followed by an increase in equity capital
amounting to SCR2.86 billion and SCR196.98 million respectively. As previously mentioned,
increases in equity capital was driven largely by the industry recording net profit after tax for the
year under review.
24 Also known as regulatory capital. 25 Includes general provisions and year to date net profit after tax. 26 Net Tangible Capitalisation Ratio (NTCR) is the ratio of capital to tangible assets on an un-weighted basis.
It is a more prudent approach as assets are not risk weighted. The recommended ratio is 6 per cent. The FIA states that a ratio of 1.50 per cent or less indicates insolvency and is a condition for revocation or variation of terms and conditions of a bank’s licence.
NTCR = Equity Capital
(Assets − Interest in Suspense − Provisions)
27 Computed by deducting specific and general provisions and interest in suspense from total assets.
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Chart 3.7: Trend in capital ratios
3.1.3 ASSET QUALITY28
Good asset quality is one factor that determines the financial soundness of a financial institution
since a deterioration in such, affects the financial condition and performance of the institution. As
such, effective evaluation, monitoring and assessment of asset is an essential part of a financial
institution’s management in order to minimise the credit risk of the institution. Chart 3.8
illustrates some asset quality indicators of the banking sector from 2013 to 2015.
28 Figures for this section are based on unaudited figures.
0%
5%
10%
15%
20%
25%
30%
2013 2014 2015
Capitaladequacy ratio
Minimumcapitaladequacy ratio
Core capitalratio
Minimum corecapital ratio
Net tangiblecapitalisationratio
34 | P a g e
Chart 3.8: Asset quality indicators
An increase of SCR20.26 million was noted in the industry’s Non-Performing Loans (NPLs) from
2014 to 2015, to settle at SCR445.26 million by end of the review period. This represented a
growth of 4.77 per cent in NPLs compared to a rise of 2.17 per cent recorded in 2014. This
movement in NPLs was mainly due to reporting issues which required reclassification of the
facilities at two banks during 2015. Thus, it can be said that the development in NPLs was not
reflective of a deterioration in the asset quality across the industry.
Total provisions29 recorded an increase of SCR0.89 million to SCR228.15 million (equivalent to
0.39 per cent) from 2014 to 2015. This rise was fairly low in comparison to the growth of 18.07
per cent for the year 2014. The lower increase in provisions is due to the value of eligible
collateral being held against the downgraded facilities.
The ratio of NPLs to total advances and total provision to advances decreased slightly by 0.37
percentage points to settle at 7.59 per cent and 3.89 per cent respectively by the end of 2015. The
slight downward movement in the said ratios, was attributed to the growth of 15.50 per cent
recorded in the industry’s total advances, from 2014 to 2015.
The rise in total NPLs from 2014 to 2015 was driven primarily by the tourism sector, followed by
the private household sector, mortgage sector and trade sector. The increase in these sectors
aggregated to SCR63.45 million but this rise was mitigated by declines recorded in the building
and construction sector and real estate sector. Similar to the previous year, the health sector and
tourism sector maintained the largest share of NPLs for the year 2015.
29 Include general provision and specific provision.
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0
50
100
150
200
250
300
350
400
450
500
2013 2014 2015
SC
R t
ho
usa
nd
s
Total provisions(LHS)
Total non-performingloans (LHS)
Total provisionsto total loansand advances(RHS)
Total non-performingloans to totalloans andadvances (RHS)
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Table 3.2: Sectoral Distribution of NPLs
Figures are in SCR ’000 2013 2014 2015 Change % Change
Agriculture & horticulture
15,272 3,370 834 -2,536 -75.25%
Art & Entertainment - 248 0 -248 100.00%
Building and Construction
16,656 37,346 9,948 -27,398 -73.36%
Education - 64 59 -5 -7.86%
Health 126,931 137,315 144,787 7,472 5.44%
Manufacturing 5,049 7,226 326 -6,900 -95.49%
Professional, Scientific & Technical Services
- 116 548 432 372.11%
Real estate 57,520 73,153 62,996 -10,157 -13.89%
Tourism 98,813 98,703 117,726 19,023 19.27%
Trade 14,490 13,208 23,379 10,171 77.01%
Transport 8,353 5,686 3,038 -2,648 -46.57%
Community, Social & Personal
- 13 25 12 89.06%
Private household 37,530 26,614 45,406 18,792 70.61%
Mortgage loans 7,018 7,184 22,645 15,461 215.21%
Others 28,284 14,696 13,488 -1,208 -8.22%
Total NPLs 415,916 424,943 445,205 20,262 4.77%
As regards the industry’s loan portfolio, in 2015 this was concentrated primarily in the tourism
sector whilst the private household sector and real estate sector accounted for the second and
third largest portion of total loans and advances. The highest growth was recorded in the
‘others’30 sectors (by SCR123.07 million to SCR226.30 million) as a result of two major facilities
denominated in foreign currency disbursed in the second half of the year 2015. Other significant
increases in total credits was observed in the financial institutions sector (by SCR77.16 million to
settle at SCR257.27 million) and the building and construction sector (by SCR67.00 million to
settle at SCR498.96 million). Table 3.2 shows the sectoral distribution of the banking sector’s loan
portfolio.
30 Sectors not being captured in the sectors identified in Table 3.2
36 | P a g e
Table 3.3: Sectoral distribution of loans and advances31
% of total loans and
advances
2013 2014 2015
Government 16.87% 13.39% 11.55%
Financial institutions 5.00% 3.39% 4.43%
Agriculture & horticulture
0.39% 0.60% 0.75%
Art & Entertainment 0.93% 0.48%
Building and Construction
10.27% 8.12% 8.59%
Education 0.46% 0.38%
Fishing 0.33% 0.70% 0.65%
Health 3.00% 2.55%
Manufacturing 0.75% 1.07% 1.76%
Professional, Scientific & Technical Services
0.54% 0.47%
Real estate 10.32% 11.74% 12.02%
Telecommunications, Computer & Information
0.55% 0.33%
Tourism 12.17% 17.49% 16.83%
Trade 4.43% 6.29% 6.91%
Transport 3.88% 3.04% 2.78%
Community, Social & Personal
0.56% 0.54%
Non Profit Institutions
0.58% 1.03% 0.68%
Private household 15.86% 16.45% 15.78%
Mortgage loans 10.04% 8.72% 8.61%
Others 9.12% 1.94% 3.90%
3.1.4 EARNINGS32
Earnings are returns on a bank’s investment in assets and capital as well as a primary measure of
its performance.
3.1.4.1 LEVELS AND TRENDS OF PROFITABILITY
The industry’s net profit before tax for the year ending 2015 was recorded at SCR656.82 million
compared to SCR476.11 million in 2014. To note that this represented a growth of 37.95 per cent
31 In 2014 a new classification for the sectoral distribution of loans was introduced. 32 Figures for this section are based on audited figures unless otherwise stated.
37 | P a g e
compared to 0.16 per cent in 2014. A net profit after tax of SCR428.60 million was recorded in
2015, a remarkable increase from SCR348.15 million in 2014. This represented a rise of 23.11
per cent, compared to the increase of 4.28 per cent in 2014. Chart 3.9 shows the trend in the
banking sector’s profits between 2013 and 2015.
Chart 3.9: Tend in level of Profit
In Table 3.4, it can be seen that the higher profit recorded in 2015 was primarily driven by higher
interest income earned in the year under review. The trend in income and expenses is explained
under the next section.
3.1.4.2 COMPOSITION OF INCOME AND EXPENSES
By the end of the review period, the banking industry’s total income was recorded at SCR1.36
billion, which is SCR268.37 million greater than what was recorded in 2014. This was attributed
mainly to an increase of SCR250.73 million in interest income, more specifically in income from
investments, which rose by SCR128.41 million and income on loans and advances which
expanded by SCR122.32 million.
Based on unaudited statements, the increase in interest income was driven mainly by higher
interest income earned on local investments notably T-Bills, following higher yields on these
securities in 2015. This is connected to the tight monetary policy stance which was implemented
by CBS during the year 2015 as previously explained. The average yields on T- Bills at the end of
2015 stood at 5.70 per cent (91 days), 6.39 per cent (182 days) and 7.15 per cent (365 days).
These represented increases of 0.31 percentage points, 1.52 percentage points and 1.55
percentage points on the 91-day, 182 day and 365 day bills, correspondingly.
In regards to the rise in interest income on loans and advances, the most noteworthy increase
was observed in income earned on term loans by SCR75.18 million33. Of note, all the loan
categories registered an increase in income, a result that was attributed to the increased volume
of the loan portfolio and the rise in lending rate.
33 This figure is based on unaudited statements.
0
100
200
300
400
500
600
700
2013 2014 2015
SC
R m
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on
s
Net profitbefore tax
Net profitafter tax
38 | P a g e
Total expenses also climbed by SCR105.11 million in the year under review, driven by increases
in interest expense and other operating expenses. As per the unaudited statements, increases
were observed primarily in interest paid on savings deposits and time deposits. As stated at
section 3.1.1.2, savings was the only type of deposit that increased in volume during the year
having increased by SCR378.96 million to stand at SCR2.62 billion by the end of 2015.
Furthermore, the average return on savings deposits increased from 1.61 per cent to 2.08 per
cent between 2014 and 2015. Although time deposits recorded a decline during the review
period, the average return on this type of deposit by the end of 2015 (3.34 per cent) was more
favourable than that of 2014 (1.92 per cent). To note that the average cost was based on
unaudited figures.
Other operating expense rose by SCR55.66 million to stand at SCR251.16 million by the end of
2015. To note that this trend was driven primarily by two banks.
Table 3.4: Earnings’ data
2013 2014 2015 % Growth
or decline
2014
% Growth
or decline
2015
Figures are in SCR '000
Interest Income 708,625 626,226 876,956 -11.63% 40.04%
Interest Expenses 139,290 103,715 136,684 -25.54% 31.79%
Net Interest Income 569,335 522,510 740,272 -8.22% 41.68%
Non-Interest Income 365,449 461,209 478,844 26.20% 3.82%
Non-interest Expenses 451,714 485,818 557,958 7.55% 14.85%
Total Income 1,074,074 1,087,435 1,355,800 1.24% 24.68%
Total Expenses 591,004 589,533 694,642 -0.25% 17.83%
Net Profit Before Tax 475,339 476,110 656,816 0.16% 37.95%
Net Profit After Tax 333,853 348,150 428,604 4.28% 23.11%
The industry’s ROA and ROE rose by 1.34 percentage points and 5.74 percentage points,
respectively in 2015. Increase in both ratios was driven by the higher profit observed during the
year, which is explained above.
Table 3.5: Trend in earnings ’ ratios
2013 2014 2015
Return on assets (ROA) 2.60% 2.55% 3.88%
Return on equity (ROE) 28.18% 30.20% 35.94%
Average yield on loans and advances 9.49% 8.07% 9.35%
Average cost of deposits 0.87% 0.59% 0.94%
Average yield on treasury bills 7.10% 2.83% 7.97%
Average yield on CBS instruments 0.76% 0.96% 2.28%
39 | P a g e
3.1.5 LIQUIDITY34
Liquidity describes the capability of an institution in funding increases in its assets and meeting
its commitments as they fall due. Good liquidity management is vital for an institution, in view
that liquidity deficit can have severe consequences both on a micro and macro level. Chart 3.10
highlights some ratios used by FSSD to monitor banks’ liquidity positions.
Chart 3.10: Trend in liquidity ratios
Most of the banking sector’s liquidity indicators observed decrease for the year 2015. This was
caused by the fall in liquid assets, specifically placements with other banks which declined by
SCR2.97 billion to stand at SCR2.67 billion at the end of 2015. Driving this development was the
decrease in customer deposits, as mentioned at section 3.1.1.2, which is a source of funding for
the afore-mentioned component of liquid assets.
Correspondingly, the industry’s core liquid assets35 amounted to SCR5.60 billion at the end of the
year 2015, after observing a decline of SCR2.48 billion from the preceding year. The core liquid
34 Figures in this section are based on unaudited figures. 35 Includes cash, balances with CBS and deposits with other banks.
0%
10%
20%
30%
40%
50%
60%
70%
80%
2013 2014 2015
Liquid assets to totalliabilities (As per FinancialInstitutions ( LiquidityRisk Management)Regulations, 2009)Core liquid assets to totalassets
Broad liquid assets to totalassets
Broad liquid assets toshort term liabilities
Loans to deposit ratio
Bank run (Liquid assets todeposit liabilities)
40 | P a g e
assets to total assets ratio dropped by 780 basis points from 2014 to 33.02 per cent at the end of
the review period.
Broad liquid assets36 also decreased during the review period given lower core liquid assets. The
drop was slightly mitigated with the increase in Government securities, such that broad liquid
assets reduced by SCR2.21 billion and stood at SCR8.34 billion at end 2015.
Broad liquid assets represented a lower proportion of total assets in 2015 (falling by 4.14
percentage points to 49.18 per cent) and of short term liabilities (falling by 3.11 percentage points
to 55.92 per cent.)
Conversely, the liquid assets37 to total liabilities ratio observed a growth of 4.40 percentage points
to settle at 59.31 per cent at the end of the year 2015. A limit of 20 per cent for this ratio is
prescribed in the Financial Institutions (Liquidity Risk Management) Regulations, 2009. All banks
remained above the prudential limit during the year under review.
Another liquidity indicator assessed by FSSD is the bank run ratio, which represents the capability
of a bank to match its deposits with liquid assets in the event of a bank run. For the year ending
2015 the industry’s bank run ratio stood at 59.54 per cent after observing a drop of 215 basis
points.
As regards the industry’s loans to deposit ratio, this climbed from 31.19 per cent in 2014 to 41.87
per cent in 2015, representing a considerable growth of 10.68 percentage points. This was driven
by the drop of 18.13 percentage points in the industry’s deposit base, vis-à-vis the relatively lower
increase of 9.92 percentage points in the loan portfolio.
3.1.6 SENSITIVITY TO MARKET RISK38
Exchange rate risk and interest rate risk are the two main components of market risk to which
banks in Seychelles are exposed to, given the nature of their main business activities. In order to
manage exchange rate risk in Seychelles, the Financial Institutions (Foreign Currency Exposure)
Regulations, 2009 stipulate a total long and total short position to capital limit of 30 per cent
respectively. During the year 2015, two banks were in violation of this foreign currency exposure
limit, nonetheless, this breach was promptly rectified. These are further illustrated in Chart 3.11.
Total long position declined from SCR154.81 million in 2014 to SCR85.37 million in 2015, with
the drop driven by two banks. As regards to total short position, it increased from SCR12.89
million in 2014 to SCR50.22 million as at reference date, whereby one bank was the main driver
of this drop.
Variable interest rates enabled by most banks’ agreements with their clients assist with banks’
management of interest rate risk.
36 Includes core liquid assets and Government securities. 37 Liquid assets used for the statutory ratio includes a component that is not part of broad liquid assets,
namely securities and other investments. 38 Figures used for this section are based on unaudited figures.
41 | P a g e
Chart 3.11: Total long and total short positions
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
2013 2014 2015
Total long position to capital Total short position to capital
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3.2 OVERVIEW OF OTHER INSTITUTIONS
3.2.1 SCU
In 2015, SCU recorded a growth of SCR25.85 million in its asset base, driven primarily by
increases in its loan portfolio. Growths were also observed in the institution’s short term
investments, which consist of SCU’s investment in T-bills and T-bonds. At the end of the year
under review, its total assets stood at SCR246.84 million.
The institution’s loan portfolio increased from SCR140.73 million in 2014 to SCR163.75 million
in 2015. This represented a growth of 16.36 per cent.
As at the end of the year 2015, SCU’s total deposit stood at SCR169.08 million after observing an
increase of SCR17.43 million. The trend in deposit base was attributed to the rise of SCR18.56
million in the institution’s savings deposit. This represented a growth of 12.87 per cent. As
regards to time deposits, this item observed further decline of SCR1.14 million in the year 2015.
It should be noted that for the past five years this item has observed consecutive declines.
SCU’s capital increased by SCR6.82 million to settle at SCR63.71 million in the year under review.
This was as a result of a growth of SCR5.82 million in ownership shares. Increases were also noted
in the general reserves amounting to SCR0.97 million.
The net profit recorded in 2015 was the highest SCU has observed during the past ten years. This
item rose by SCR1.37 million, representing a significant increase of 73.21 per cent. The trend was
driven by increases in interest earned on loans and Government securities amounting to SCR1.22
million and SCR1.51 million respectively. At the end of 2015 SCU’s net profit stood at SCR3.23
million.
43 | P a g e
Chart 3.12: SCU’s indicators
3.2.2 DBS
As depicted in Table 3.6, the shareholdings of DBS in 2015 remained similar to that of the previous
year. The Government of Seychelles remain the main shareholder of DBS, with the remaining
shareholders belonging to 2 international banks and 1 local bank.
Table 3.6: DBS ownership
DBS shareholders Share
Government of Seychelles 60.51%
Agence Francaise de Development 20.00%
European Investment Bank 15.90%
Nouvobanq 1.59%
DBS’ asset base grew by SCR132.13 million to settle at SCR698.16 million at the end of 2015. This
represented a growth rate of 23.34 per cent, which is significantly higher compared to 9.39 per
cent recorded in the previous year. This rise in total assets was mainly attributed to the expansion
of 28.31 per cent in DBS’ loan portfolio. The latter increased by SCR119.27 million to stand at
SCR540.56 million at the end of 2015. The growth in the institution’s loan portfolio reflected an
increase of SCR129.62 million in loans extended under SME loan scheme. It should be noted that
other than the rise observed in loans to SMEs, notable increases were also recorded in loans to
the building and construction sector by SCR29.33 million. These increases were however
lessened by declines in other sectors namely in the services sector and industry sector by SR32.09
million and SCR13.86 million, respectively.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0
50
100
150
200
250
300
2013 2014 2015
SC
R m
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SC
R m
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on
s
Total assets (LHS) Total deposits (LHS) Total loans (LHS)
Capital (LHS) Net profit (RHS)
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In view that DBS is a non-deposit taking institution, the institution mainly funds its growth by
borrowing from other financial institutions and through the issuance of bonds. In 2015, no new
bonds were issued although DBS expects to make new issuance in 2016. In regards to the
institution’s borrowings, this increased by SCR114.24 million to reach SCR258.90 million at the
end of 2015. The increase in borrowings was noted in local borrowings as opposed to overseas
borrowings, which decreased from representing 13.95 per cent of total borrowings in 2014 to
6.56 per cent in 2015.
An increase of SCR14.50 million (5.18 per cent) was observed in DBS’ equity capital from 2014,
causing the item to settle at SCR294.14 million in 2015. This increase reflected the net profit
generated by the institution for the year in question. To note that there were no changes in the
value of DBS’ share capital and reserves from 2014 to 2015.
As mentioned above, a net profit of SCR14.50 million was recorded by DBS for the year 2015,
which is slightly lower (by SCR1.11 million) than the profit of SCR15.61 million made by the
institution in the preceding year. This reduction in revenue was brought about by higher
operating expenses39 having increased by SCR5.85 million, which consequently mitigated the
effect of the net income which increased by SCR6.14 million during the year.
Chart 3.13: DBS’ indicators
3.2.3 HFC
Total assets increased from SCR507.79 million in 2014 to SCR537.70 million in the year 2015,
representing a growth of 5.89 per cent compared to the previous year where there was a decline
of 12.14 per cent. The main component that caused the rise in the institution’s asset base was
39 Consists of administration costs and staff costs, of which the latter was the main reason for the fall in
revenue.
-
100
200
300
400
500
600
700
800
2013 2014 2015
SC
R m
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on
s
Total Assets Total Loans Equity Capital Net profit
45 | P a g e
primarily loans and advances to customers, which saw an increase by SCR67.24 million to
SCR451.66 million.
Cash and bank balances, reported a decline of SCR46.85 million in the year under review. The
decrease in this item was due to disbursement of new loans made during the year as well as
repayment of borrowings effected by HFC.
HFC’s capital grew by 12.95 per cent from SCR299.62 million in 2014 to SCR338.42 million in
2015. This growth was mainly observed in the institution’s capital reserve which increased by
SCR17.78 million to settle at SCR256.97 million in 2015. Increase in this item was entirely from
cash received from the Government in relation to the housing finance subsidy scheme, which was
implemented in 2014. This scheme allows first time home buyers earning under SCR20,000 a
month to qualify for a Government subsidy in the form of a cash grant between SCR50,000 to
SCR200,000 as a down payment. The other noteworthy increase in HFC’s capital was noted in the
institution’s retained earnings, following a rise in net profit.
HFC’s net profit of SCR16.92 million in the year 2015, represented a rise of 105.57 per cent from
the previous year. This was a significant increase in HFC’s performance compared to 18.69 per
cent increment in the net profit in 2014.The higher profit in 2015 was mainly due to an increase
in the institution’s interest income, which is linked primarily to new loans disbursed during the
year under review.
Chart 3.14: HFC’s indicators
0
100
200
300
400
500
600
700
2013 2014 2015
SC
R m
illi
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s
Total assets Loans Capital Net profit
46 | P a g e
CHAPTER 4 – DEVELOPMENTS IN THE SUPERVISORY
FRAMEWORK AND THE FINANCIAL SECTOR
This chapter provides an overview of developments in the regulatory and supervisory framework
relating to the supervised institutions during 2015. The initiatives undertaken to achieve further
development within the financial sector are also presented.
4.1 OVERVIEW OF DEVELOPMENTS
In terms of development in the regulatory and supervisory framework, FSSD’s work is guided by approaches and principles set by standard setting bodies such as BCBS in respect of banks and WOCCU for the credit union. In as much as the standards are relevant and can be adapted to the local context, FSSD seeks to pay heed to international best practices towards the objective of bolstering the regulatory and supervisory framework and ensuring the soundness of the financial system. As regards actions related to development in the financial sector, this is blueprinted by the FSDIP which was approved by the Cabinet of Ministers in November 2014. The FSDIP addresses certain areas in the financial sector identified as having potentially high impact on individuals, businesses and Government agencies as well as on the safety and soundness of the financial system. It provides an impetus for the completion of actions that had been initiated and also sets the pace for new initiatives in the financial sector. Further details on the FSDIP are contained in section 4.3.9.
4.2 LEGISLATIVE DEVELOPMENTS
The main legislative developments in 2015 pertained to the amendment of the Credit Union Act,
2009. This is summarised at section 4.2.1.
FSSD was also involved in work that led to the enactment of the Secured Transactions Act during
the year under review in collaboration with the Office of the Registrar General, as summarised in
section 4.2.2.
Section 4.2.3 also provides an overview of the changes implemented in the licensing process of
banks (whereby approval for providing payment services is required) and Class A BDC (whereby
a payment service provider licence for money remittance services is required) in relation to the
requirements of the Licensing and Authorisations Regulations issued under the National Payment
System Act in 2014.
4.2.1 AMENDMENT TO CREDIT UNION ACT, 2009
The Credit Union Act, 2009 was amended in September 2015 with the following objectives:
Ensure that the legislation and supervision are at par with international standards and
are effective in relation to CUs’ operations;
47 | P a g e
Strengthen the supervisory power of the regulatory authority over prudential matters
governing CUs;
Strengthen enforcement action against unsafe conducts and operations of CUs; and
Provide the regulatory authority with power to issue rules in regards to the operations of
CUs.
The salient amendments of the said Act are summarised below in Table 4.1.
Table 4.1: Summary of amendments to the Credit Union Act, 2009
Area
Summary
Other activities of a CU
The amendment allows for a CU to provide other activities that are consistent with the activities of a financial institution, as may be prescribed by Regulations. This addresses the previous restriction whereby the only permissible activities were listed in the Act.
Approval of members by the regulatory authority prior to election to Board and Supervisory Committee in the AGM
The amendment provides for the regulatory authority to approve a member of a CU, before the person is elected to the Board or Supervisory Committee in the AGM. This is consistent with ensuring that persons involved in strategic leadership and decision-making are fit and proper, that is, they meet qualities of integrity, competency and credibility. The amendment also prescribes the conditions for non-eligibility to be appointed on the Board and Supervisory Committee.
Appointment of Chief Executive Officer The amendment provides for the Chief Executive Officer to be approved at the AGM and to have experience and expertise in finance, banking, accounting, management, cooperation or any other field related to the operation of a credit union.
Loans The amendment provides for limit on large exposure, which is 10 per cent for all members or such other amount as may be prescribed by the regulatory authority. This provision aims at preventing excessive risk being concentrated with a single borrower. The amendment also allows for the employees of CUs to benefit from employee credit schemes.
Prudential requirements The amendment provides the regulatory authority with the power to issue Regulations or rules for prudential requirements. These set parameters within which CUs should operate in the interest of ensuring their soundness and the protection of their members’ interest:
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Minimum required capital and capital adequacy: The amendment requires that a CU maintains in Seychelles unimpaired capital as prescribed by rules by the regulatory authority. It also provides for the regulatory authority to prescribe rules on the capital to risk-weighted assets to be maintained by CUs. Foreign currency exposure limits: The amendment provides for the regulatory authority to issue rules with regards to maximum open positions in foreign currencies held by CUs. This is a prudential measure to mitigate against foreign currency risk, whereby movements in the value of foreign currency may potentially result in losses for an institution. Credit classification and provisioning: The amendment provides for rules to be issued on asset classification and provisioning. This encourages financial institutions to manage credit risk by monitoring their credit portfolio and providing for credit risk.
Periodic Statements The existing practice whereby the CU was already submitting certain periodic returns to CBS has been enforced with inclusion of the requirement to submit periodic statements in the form required by Regulations in the Act. Such information allows the regulatory authority to monitor the status of the institution as well as compliance to prudential requirements.
Penalties and Compounding of Offences
A specific section on penalties for offences has been included with the amendment. This section makes provision for offences and applicable penalties. In addition to offences, which were originally covered, the section also includes other offences to ensure that the Act is enforced in its entirety. Additionally, in order to facilitate enforcement, a provision for offences to be compounded has been included. Essentially, where a CU or any other person agrees in writing to the compounding of a contravention of the Credit Union Act, 2009 which is an offence punishable on conviction by a fine, the regulatory authority, in consultation with the Attorney General, may compound the offence as prescribed by regulations.
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4.2.2 SECURED TRANSACTIONS ACT, 2015
The Secured Transactions Act was enacted by the President in September 2015. Work on the Act
was initiated late in 2013 with the assistance of the World Bank.
Secured transactions are transactions between parties that have assets as security for the
transaction. In secured lending, the lender will have interest in the asset and as such will have
recourse to the asset if the borrower defaults. It is important that the framework for secured
lending in any country is efficient in order to safeguard the interest of the lender and support
effective access to credit.
The aim of the afore-mentioned legislation is thus to modernise the legal and institutional
framework for secured transactions in Seychelles guided by international best practices. It seeks
to increase access to credit to the private sector in Seychelles by introducing a simplified,
streamlined legal and institutional framework for secured lending that strengthens the rights of
all creditors in movable collaterals to secure all types of obligations.
The Act introduces a centralised, comprehensive, all-electronic and web-based secured transactions registry in the Office of the Registrar General. The Registry aims to provide efficient self-service by the public, reducing costs to lenders by eliminating need for lawyers and other intermediaries and reducing costs and burden on Government administrators. By the end of 2015, work on the Registry had been initiated.
4.2.3 APPROVAL/LICENSING FOR FINANCIAL INSTITUTIONS TO PROVIDE PAYMENT
SERVICES
The National Payment System Act which in August 2014, replaced the National Clearance and
Settlements System Act 2010, stipulates that CBS shall regulate and oversee the national payment
systems for the purpose of ensuring its safe, secure, efficient and effective operation. Payment
service providers are part of the national payment system and payment services include the
following:
Services enabling cash deposits and withdrawals
Execution of payment transactions
Issuing and/or acquisition of payment instruments
Money remittances; and
Any other services functional to the transfer of money. This also includes the issuance of
electronic money and electronic money instruments. The term does not include the
provision of solely online and telecommunication services or network access.
The National Payment System (Licensing and Authorisation) Regulations issued in December
2014, specifies the requirements that need to be met to offer payment services. Overall, CBS needs
to be satisfied with various aspects relating specifically to payment services, including inter-alia,
the governance arrangement, risk-management and controls, resources, IT system and adequacy
of procedures for complaints handling. These requirements were applied in 2015 whereby
applicants for Class A BDC licence and for banking licence were also subject to the afore-
mentioned Regulations, in addition to the licensing provisions under the FIA.
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In 2015, CBS considered potential revisions to certain existing laws, including the Financial
Institutions (Bureau de Change) Regulations, 2008 and the Foreign Exchange Act, 2009 in order
to support the afore-mentioned developments in the payment system regulatory framework.
4.3 DEVELOPMENTS RELATING TO THE SUPERVISORY FRAMEWORK AND
THE FINANCIAL SECTOR
4. 3.1 FINANCIAL LEASING
The year under review continued with previous years’ initiatives on creating an enabling
environment for financial leasing in the country. In April 2014, CBS entered into a co-operation
agreement with the IFC, a member of the World Bank Group whose mission is to promote
sustainable private sector investment in developing countries. The agreement involves co-
operation to improve the legal and regulatory financial leasing frameworks and facilitate the
development of the leasing sector in Seychelles. This also includes the implementation of market
awareness and education efforts to support the expansion of the financial leasing industry in the
country.
As regards the regulatory framework, the Financial Leasing Act was enacted in October 2013 and
the following regulations were promulgated in 2014; the Licensing Regulations, the Capital
Adequacy and Reserve Fund Regulations and the Lease Classification and Provisioning
Regulations.
During the year under review, research was undertaken on international best practices for the
liquidity and gearing management framework for financial leasing which would be incorporated
in regulations.
The regulations on liquidity risk management will seek to ensure that financial leasing
institutions are able to efficiently meet their obligations as they fall due, without affecting their
daily operations or financial condition. It will set a prudential ratio that these institutions will
need to comply with and report periodically to the CBS. Additionally, it will include requirements
on the governance framework regarding liquidity risk management, for example the formulation
of policies and strategies and the setting up of liquidity risk management committee.
The gearing management framework is also important for financial leasing institutions. Gearing
is a measure of financial leverage demonstrating the degree to which the companies’ operations
are funded by owners’ funds and various creditors’ funds. The regulations will set gearing ratios
as appropriate for deposit taking and non-deposit taking financial leasing institutions with the
aim of ensuring that they are not excessively exposed to debt. The regulations regarding liquidity
and gearing management are expected to be promulgated in 2016.
As regards capacity building, training for CBS staff in relation to financial leasing, was undertaken
during the year under review with the assistance of IFC. In collaboration with the latter as well as
the SEnPA a training session for SMEs was also facilitated during the third quarter of 2015.
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During this same quarter, work was initiated on a market study, which involved discussion with
various stakeholders to assess the market potentials for financial leasing and to identify where
improvements can be made. The second phase of this review is due at the start of 2016 to assess
the areas for potential benefit under prevailing conditions. The findings of this exercise will be
published into a market study report that will serve to educate the general public who could
benefit from such a product, as well as for potential investors’ information.
Box 4.1 explains the concept of financial leasing.
Box 4.1: Financial Leasing
Financial leasing is used all over the world and is an alternative means for financing moveable assets. A financial lease agreement is of a tri-partite nature, meaning that this is an agreement entered into by three parties. More details are provided in respect of these three parties below. Party Legal definition Explanation
Lessor
A person licensed or approved, to conduct financial leasing business and who transfers the right to possession and use of an asset under lease to a lessee.
This will be the company licensed by the CBS in order to offer such a financing option. This could include banks which are granted approval in this regard, as well as other non-banks. Accordingly, persons will have to apply to these companies in order to request funding for equipment via a financial lease agreement. One would be able to go to the banks, but also to other companies which are licensed specifically for the purpose of engaging in this business in Seychelles.
Lessee
A person who acquires a right to possession and use of an asset under the lease for an agreed period of time in exchange for agreed lease payments.
This will be the person applying for financing for the purchase of the asset. These assets can generally be used by the person in order to generate a revenue for and to allow for the scheduled repayments to be effected.
Supplier
A person who supplies an asset for the purpose of a financial lease, and transfers title to the asset to the lessor for delivery to the lessee.
This will be the supplier of the asset. The supplier will be paid directly by the lessor and typically will transfer the title of ownership to the asset over to the lessor, but can deliver the asset over to the lessee if so agreed.
Currently, when funding is required to purchase an asset, one would generally go to a bank to acquire a loan in the absence of available funds to purchase the asset outright. With the development of the financial leasing sector, persons will have a greater choice. Rather than only having the banks to go to, one will be able to shop around and compare the offerings from both banks and financial leasing institutions.
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When one applies for a loan, the banks mostly require the applicant to provide a collateral as security for the loan or to provide guarantors, unless it is an unsecured loan, in which case the borrower is typically subjected to higher interest rates to account for the increased risk of such exposures. The collateral or guarantor requirement serves as a form of security and provides the bank with a sense of guarantee that the person will repay the borrowed amount and interest, as agreed. Once the loan request is approved, the funds are disbursed to the borrower, who then directly effects payment for the purchase of such asset from the supplier. This asset is owned by the borrower, with the bank having a lien on the asset. Accordingly, the borrower cannot sell the asset without the bank’s approval. Therein lies one of the key distinguishing element between a loan and a financial lease and this is illustrated diagrammatically in Figures 1 and 2.
In a financial lease, the lessor retains legal ownership of the asset, whilst the lessee is granted the right to possess and use the asset during the tenor, in return for agreed monetary repayments. This is illustrated in Figure 2. Accordingly, even if one has the asset in their possession, it is legally registered and owned by the lessor. As such, the asset itself serves as the collateral/security for the financing, as the lessee does not own the asset during the tenor. In some cases however, particularly involving the financing of specialised assets, the lessor may require a partial contribution towards the cost of the asset, although this will seldom be the case for standard assets (which have a readily available domestic second hand market). For clarity, equipment that will have to be tailor-made or customised for the lessee would be deemed as specialised assets. These will likely not be easily re-saleable locally without taking
Asset Asset
Lessor absolute legal owner of the asset
under a financial lease agreement
Lessee granted the right to possess
and use the asset by the lessor, in
return for agreed repayments
Figure 2 (ABOVE): diagramatic illustration of an FL agreement
Loan
Borrower
Asset
Bank
Borrower is the legal owner of the asset in the case of a loan
Bank has a lien on the
asset in the case of a
loan
Figure 1 (Above): DiagramMatical illustration of ownership and lien in the case of a loan
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a significant hair-cut in value, i.e. a reduction in its re-sale price. This contrasts to standardised assets. The right to possess and use the asset by the lessee, subject to the terms and conditions of the financial lease agreement, allows for the generation of an income where the lessee is a business, whilst allowing more flexibility in regards to working capital. Optimally, the asset’s use will generate an income in excess of the agreed repayments, thereby allowing the periodic repayments to be effected to the lessor. It also allows a business to better manage its finances and free up their cash-flow, allowing such to be more efficiently allocated. Financial leasing is generally more targeted towards large value moveable asset acquisition, principally being acquired for commercial ventures. Thus, for illustrative purposes, assets that could be financed by a financial lease include earth moving equipment (such as dump trucks and excavators), cranes, fishing boats. Tourism establishments wishing to also invest in a large volume of a certain type of asset could also acquire such through a financial lease, and this could include things such as television units for each room, hairdryers, kitchen equipment and mini-fridges, etc. It is also common around the globe for farmers and fishermen to acquire equipment via a financial lease.
4.3.2 ADDITIONAL BANKING ACTIVITIES
The FSDIP states that policy decisions need to be taken on the financial activities and services to
be developed in Seychelles. This includes the introduction of financial services not currently
available in the country, including Islamic banking, investment banking and private banking.
A number of initiatives has been undertaken in order to prepare for the introduction of the new
activities in the country. A grant from the ICF was approved during the third quarter of 2015
which has, in addition to other areas, been put towards capacity building and consultancies in
relation to the additional activities. Capacity building missions were initiated during the fourth
quarter of 2015 and will continue until August 2016. This also ties in with legal assistance from
World Bank under the RAS program in this regard. Section 4.10 discusses TA from international
organisations predominantly for the FSDIP implementation in further detail.
During the year under review, CBS received an inception mission from a legal expert on
amendments to the legal framework to cater for additional banking activities, amongst other
aspects. TA in this area is expected to continue in the coming year. The amendments will follow
from policy decisions on the new banking activities that will be introduced in the country.
4.3.2.1 ISLAMIC BANKING AND FINANCE
The Government, in partnership with CBS and FSA commissioned a feasibility study on Islamic
banking and finance, which was initiated in September 2014. The findings of the feasibility study
were delivered in May 2015.
The outcome of the feasibility report was positive, and outlined several opportunities which could
be exploited and gaps to be addressed by the main stakeholders. Towards the end of 2015, the
procurement formalities in respect of a consultancy for the formulation of a policy and strategy
on Islamic banking and finance, were undertaken by CBS and FSA. The consultancy was expected
to be initiated in the first quarter of 2016. Additionally, the above-mentioned study visits in
jurisdictions experienced in Islamic banking and finance seek to enhance staff’s understanding of
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the concepts, including the regulatory and supervisory challenges, which will feed into work on
the appropriate framework for the regulation and oversight of Islamic banking and finance.
4.3.2.2 INVESTMENT BANKING AND PRIVATE BANKING
Procedures for procuring a consultant to deliver a workshop on investment banking and private
banking in the country to CBS and FSA staff were also undertaken late in 2015. The objective of
the workshop, scheduled for the first half of 2016, is to enhance the capacity of the staff from
these two regulatory bodies in relation to these banking activities. This will assist the authorities
in developing appropriate policy that will promote the development of the financial sector whilst
safeguarding its soundness through adoption of internationally recognised standards. As at the
end of 2015, connections were being established with foreign regulatory authorities in order to
organise study tours on the subject matter.
4.3.3 REVIEW OF RISKS RELATED TO OFFSHORE FINANCIAL ACTIVITIES
4.3.3.1 IMF MISSIONS
In view of international developments whereby offshore financial services have been under
increasing scrutiny, CBS has found it important to obtain TA with regards to supervision of these
activities and enhancing its risk mitigation framework.
In March 2015, CBS received assistance from the MCM Division of the IMF with respect to the
supervision of offshore banks. The aim of the mission was to better understand the risks of
offshore banks, to make appropriate risk assessment and create the framework for supervisory
risk mitigation for offshore banks. This covered broadly recommendations in relation to licensing,
On-Site and Off-Site supervision of these banks, as well as enhanced collaboration with other
regulatory authorities, namely, the FSA and the FIU.
In September 2015, AFS and MCM provided TA on RBS, with specific focus on ML/TF risk. The
mission followed up and built on the recommendations made in the March mission. It provided
comprehensive training and TA on the Off-Site reporting and risk rating of banks and on the use
of supervisory tools to ensure compliance with AML/CFT measures and ML/TF risk. Whilst the
mission addressed the risks of offshore banking, recommendations relevant to the overall
supervisory approach of the CBS including on the supervisory tools were made. Specifically, the
mission recommended that FSSD leverages on the existing CAMELS approach to supervision,
making it more risk based with more focus on risk management architecture, governance,
controls and systems. It also sought to make the assessment of banks more granular, introduce
transparent quantitative parameters and cover assessment of all material risks.
Additionally, the mission provided guidance on self-assessment of Seychelles’ compliance to the
relevant Basel Core Principles and provided advice on the preparation for the forthcoming NRA
and mutual evaluation review of the FATF standards, scheduled for 2016.
4.3.3.2 NRA AND MUTUAL EVALUATION
In preparation for the official launch of the NRA, scheduled in January 2016, work was initiated
on the exercise in the latter part of the year under review. The rationale for the NRA is embedded
in FATF recommendation 1 which is reproduced in Box 4.2 below:
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Box 4.2: FATF recommendation 1
‘Countries should identify, assess, and understand the ML/TF risks for the country, and should take action, including designating an authority or mechanism to coordinate actions to assess risks, and apply resources, aimed at ensuring the risks are mitigated effectively. Based on that assessment, countries should apply a risk based approach to ensure that measures to prevent or mitigate ML/TF are commensurate with the risks identified.’
The objective of the NRA is to assist the Seychelles authorities in its self-assessment of ML/TF
risks with broad participation from various stakeholders. In addition, the project aims to improve
the skills and knowledge of the Government agencies in assessing these risks and applying a risk
based approach in this area. The project is co-ordinated by the FIU and includes the following
stakeholders, the MFTBE, CBS, FSA, the Seychelles Police, the Attorney General’s Office, the
banking industry, Corporate Services Providers, Nation Drugs Enforcement Agency, insurance
companies and designated non-financial businesses and professions. The assessment will
prepare the authorities for the Mutual Evaluation against the FATF principles which is expected
to be undertaken later in 2016. The FATF is an international standard-setter in the fight against
ML/TF and proliferation of weapons of mass destruction. The assessment will determine the
country’s compliance with the FATF Standards and whether the AML/CFT system is working
effectively.
This project is funded by CBS under the World Bank’s RAS, on which further details can be found
at section 4.10.
4.3.3.3 TRIPARTITE MOU
The CBS, FSA and FIU entered into a Memorandum of Understanding in October 2015 with the
aim of improving the regulatory framework and addressing risks or corporate activities which
may affect the international standing and good repute of Seychelles’ financial sector. It seeks to
implement a system of co-operation between the regulators and to establish an overall joint
policy taking into account international best practice.
4.3.3.4 OECD AEOI
During 2015 Seychelles asserted its commitment to implement the new global standard for
automatically exchanging information for tax purposes, termed as AEOI. Box 4.3 provides a
summary of the concept of AEOI.
Box 4.3: AEOI the basics: what, how and why?
What? How? Why?
Systematic and periodic transmission of bulk taxpayer information by the source country to the residence country
Information on various potential categories obtained by a tax authority (e.g. dividends, interest, royalties, salaries,
The taxpayer’s country of residence can check its tax records to verify offshore income/assets have
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A core form of tax co-operation provided for by Double taxation Agreements/the MCAA
pensions, changes in residence, valued added tax refunds etc.)
Exchanged with tax authorities of treaty partners
been accurately reported
Deterrence impact and voluntary compliance
Source: OECD Global Forum on Transparency and Exchange of Information for Tax Purposes
In February 2015, Seychelles became a signatory to the Multilateral Convention on Mutual
Administrative Assistance in Tax Matters. The Convention, which was originally developed by the
OECD and the Council of Europe in 1988 and amended in 2010, provides for all forms of
administrative co-operation including automatic exchange of information and contains strict
rules on confidentiality and proper use of information. One of the main advantages of the
Convention is its global reach. Automatic exchange under the Convention requires a separate
agreement between the competent authorities of the parties (with actual automatic exchange
always taking place on a bilateral basis). As such the Convention provides the legal basis for the
Multilateral Competent Authority Agreement or the MCAA which was signed by Seychelles in May
2015. The MCAA implements the Standard for Automatic Exchange of Financial Information also
known as the CRS, specifying the details of what information will be exchanged and when.
Seychelles is a member of the Early Adopters’ Group and has committed to early exchange of
financial information. The first exchange of information in relation to new accounts and pre-
existing individual high value accounts is expected to take place by the end of September 2017.
During 2015, the MFTBE steered work towards implementation of the AEOI, which included the
organisation of a workshop in July 2015 facilitated by OECD to train Government officials on
implementing the CRS as well as consultation with the reporting entities, which also included the
banks.
The CRS contains the reporting and due diligence standard that underpins the AEOI. The CRS
standardises the AEOI process whilst recognising that a local approach needs to be adopted in
certain areas. Standardisation allows for process simplification, higher effectiveness and lower
costs for the stakeholders. Implementation of the CRS requires translating the standard into local
law. By the end of 2015, the Regulations on CRS to be issued under the Revenue Administration
Act was near finalisation40.
4.3.3.5 UNITED STATES FATCA
The United States FATCA was enacted in March 2010 as part of the Hiring Incentives to Restore
Employment Act. FATCA seeks to ensure that all foreign owned assets by United States taxpayers
are taxed by the United States Government. In 2014, Seychelles announced its intention to enter
into the Model 1B Inter-Governmental Agreement for FATCA with the United States of America. It
requires financial institutions in Seychelles to report information on financial accounts of
customers from the United States to the Seychelles Revenue Commission (SRC) which is then
provided to the Internal Revenue Service on an automatic basis. Although this had not yet been
40 The Common Reporting Standards Regulation was issued under the Revenue Administration Act, 2009 on January 04, 2016.
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signed by the end of 2015, the Seychelles Revenue Commission had engaged in communication
with the banks with regards to reporting for its purpose. The AEOI, described above, has drawn
extensively from the FATCA model.
4.3.4 BASEL II & III
CBS maintains its plans to implement relevant elements of Basel II and III. TA was expected for
quarter 1 2016 from AFS of IMF in this regard. By the end of 2015 a draft internal paper on
standardised approach to credit risk had been prepared by FSSD for review by the afore-
mentioned mission team.
4.3.4.1 BASEL II
Basel II is a regulatory capital framework built on a risk management platform. It goes beyond
prescribing capital adequacy ratios, and places emphasis on linking capital to risk. The philosophy
of Basel II is banks’ self-management, supervisory review and market discipline with a view
towards enhanced risk management. Basel II consists of 3 pillars. Whilst Pillar 1 outlines the
approaches to calculate the minimum level of capital, Pillar 2 is more qualitative in nature and
Pillar 3 relates to market disclosure.
A consultative process will be adopted for implementation of the standards. FSSD plans to issue
a discussion paper on Pillar 1 of Basel II, which will include the standardised approaches to credit
risk and also seek to apply a capital charge for market risk relevant for Seychelles.
Pillar 2 seeks to ensure that banks assess their capital positions vis-à-vis their overall risk (the
ICAAP) and that supervisors review this process, implement appropriate actions and is able to
intervene to restore capital levels if required (the SREP). FSSD plans to obtain consultancy to
assist with the technical and practical aspects for implementation of Pillar 2.
Pillar 2 ties in closely with work to enhance the RBS framework, which is discussed at section
4.3.5. Pillar 3 includes quantitative and qualitative disclosures on capital adequacy and risk
management aspects. It encourages market discipline by which market participants can assess
the capital adequacy of a bank in relation to risk exposures and risk management systems and
thus contribute to the soundness of the financial system.
4.3.4.2 BASEL III
Basel III was brought forth by BCBS in response to the 2008 global financial crisis with the aim of
improving the banking sector's ability to absorb shocks arising from financial and economic
stress. The Basel III pronouncements seek to increase the resilience of banks during times of
stress. It has a macro-prudential overlay, and seeks to address system-wide risks that can build
up across the banking sector. Basel III is currently being phased in with full adoption anticipated
in 2019. At the initial stage, in Seychelles the plan is to implement the capital definition in line
with Basel III. Further TA is anticipated on the other elements of Basel III, with a view to augment
to skills base and assist the CBS in analysing and planning its adequate introduction. A summary
of the main components of Basel III is shown in Box 4.4.
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Box 4.4: Summary of main aspects of Basel III
CAPITAL Basel III places emphasis on the quality of capital, namely Core Equity Tier 1 capital that
can fully, unconditionally and immediately absorb losses. It introduces capital buffers, including:
(i) The capital conservation above Core Equity Tier 1 (up to 2.5% of risk weighted assets (RWA)) which obliges banks to conserve a growing proportion of earnings as their Core Equity Tier 1 capital approaches a minimum level.
(ii) The counter-cyclical buffer allows the supervisory authority to require banks to retain capital up to 2.5% of RWA during an upturn in the business cycle and release this capital as the cycle changes.
A leverage ratio which is a regulatory capital to un-weighted gross exposure is also introduced. This seeks to constrain the build-up of leverage in the banking sector and reinforce the risk based requirements with a simple, non-risk based measure that establishes a floor.
LIQUIDITY
Two liquidity standards have been designed with the aim of limiting a bank’s exposure to liquidity risk, as follows: (i) The Liquidity Coverage Ratio determines the size and composition of a reserve
of highly liquid assets, which can be sold should a liquidity event occur. The stock of high quality liquid assets should cover a bank’s forecasted net cash outflows over a stress period of 30 days.
(ii) The Net Stable Funding Ratio aims to ensure that the illiquid portion of a bank’s assets is backed by stable funding, such as equity, long term debt and stable customer deposits. It compares the amount of stable funding that is available to the bank with its required amount of stable funding. Available stable funding (ASF) is the portion of the bank’s equity and funding liabilities that can be relied upon over a year. The category of funding is multiplied by a percentage termed the ASF factor, for which the percentage increases with the availability of the funding over a one-year horizon. In determining the appropriate amount of stable funding required for the various assets of a bank, a percentage or a RSF factor is applied to the asset, whereby a higher percentage is applicable to assets that have longer maturity and are less easy to monetise. As such, no stable funding is required for claims that are either immediately available or that mature within a shorter time period.
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4.3.5 RBS
As highlighted in section 2.3 of the report, in 2015 increased importance was placed on research
work to enhance the RBS framework within which the work of FSSD is undertaken taking into
account international best practices. RBS is a comprehensive structured process that assesses key
risks to which individual financial institutions and the financial system are exposed, the risk
management policies and practices that are used to mitigate risk; and focus supervisory
resources based on the risk characteristics of the institutions.
Its fundamental principles are as follows:
Efficient allocation of scarce supervisory resources towards individual banks;
• Structured process to identify the most critical risks facing supervised entities, the
larger economy and the operating environment;
• Understanding supervised entities, their strategies and business models;
• Identifying any build-up of risk in individual entities and the sector as a whole,
including emerging risks which could impact entities and the sector in future;
• Determine the systemic relevance of individual banks.
RBS is embedded in the Basel Core Principles for Effective Banking Supervision, and it moves
away from the traditional compliance approach (i.e. rules based supervisory system) to a more
forward looking, principles based approach to assessing and dealing with risks. The two TA
referred to at section 4.3.3.1 received from IMF during 2015 is relevant to the initiative to
enhance the RBS framework.
As aforementioned, Pillar 2 is highly relevant to the RBS initiatives. Supervisors’ assessment of
banks’ ICAAP through the SREP is a key input into the RBS process and provides insight into
capital and liquidity planning and management. The SREP entails qualitative and quantitative
assessment of a bank’s ICAAP.
The qualitative assessment essentially covers Board governance, management, controls and
systems, which are covered by RBS. The quantitative assessment involves banks’ identification of
material risks, risk measurement and risk mitigation. ICAAP submission in terms of RBS provides
supervisors with a new tool that allows supervisors to assess banks’ own capital and liquidity
management processes. This enables supervisors to make informed decisions about adequate
levels of capital and liquidity.
In order to successfully implement the above, building the relevant capacity is a key factor for
both the supervisor and the industry. All these elements will be considered in a policy paper on
RBS, which will be formulated by FSSD.
4.3.6 FINANCIAL EDUCATION AND CONSUMER EMPOWERMENT
One of CBS’ strategic objectives, as outlined in its strategic plan for 2014 to 2018 is to effectively
promote a sound financial system, including the payment system. The strategic plan recognises
the importance of consumer protection to financial stability. Upholding the principles of
consumer protection, such as fair treatment, recourse mechanism and financial education
contributes towards the achievement of the afore-mentioned strategic objective. During 2015 a
number of initiatives were undertaken towards this end as highlighted below.
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4.3.6.1 ALLIANCE FOR FINANCIAL INCLUSION
Seychelles became a member of the AFI network in August 2014. AFI is a global network of
financial policymakers from emerging and developing countries which promotes and develops
evidence based policy in regards to financial inclusion. AFI provides platforms for peer-to-peer
learning that encourages and enables financial policymakers to interact and exchange knowledge.
AFI initiatives include the following:
Working Groups, which bring members together to discuss and develop policy ideas on
specific themes. Working Groups provide a space for members to participate equally,
share knowledge, formulate policy and develop guidelines. CBS nominated
representatives on 3 Working Groups in 2015, the Consumer Empowerment and Market
Conduct, Digital Financial Services and SME Financing. This was done on the basis of what
was felt to be most relevant for CBS at this point in time. CBS was first represented in the
Working Group meetings which were held in Mozambique in 2015;
The Global Policy Forum was also attended in Mozambique during the year under review.
This is held on an annual basis, hosted by a member country and is the key event for its
members. It brings together senior representatives of its members and discusses
collaborative approaches to promoting global financial inclusion agenda;
AFI also facilitates the formation of regional initiatives that are effectively regional groups
to discuss specific issues, for example the African Mobile Phone Financial Services Policy
Initiative;
AFI members may also benefit from knowledge exchange and policy grants that support
learning, research, development or implementation of financial inclusion related policy
solutions;
Another initiative facilitated by AFI is the online member zone, which is an exclusive
online platform for AFI members to exchange ideas;
AFI encourages members to make what is termed as Maya Declaration Commitments.
This helps members determine their own objectives for financial inclusion, draft a plan
for achieving them and co-ordinate with others as they work toward a common goal. It
also allows members to follow others’ progress in relation to the Commitments. CBS plans
to make its Maya Commitments in future Global Policy Forum.
4.3.6.2 REVIEW OF THE LEGAL FRAMEWORK FOR CONSUMER PROTECTION IN THE
FINANCIAL SECTOR
The FSDIP includes initiatives aimed at promoting consumer protection in the financial sector.
Consumers’ expectation that they will receive fair treatment and quality services from financial
institutions contributes to increasing confidence in the country’s financial sector and is an
important element for its development. In 2015, work was initiated on the regulatory framework
in this regard, with the assistance of a legal expert from the World Bank under the RAS program.
The mission that was undertaken towards the last quarter of 2015 aimed to assist with achieving
a clear position as to the type of legal framework for financial consumer protection that is
warranted and suitable for Seychelles. It also gave consideration to the institutional arrangement
for handling of consumer protection matters that would result in more efficiency and
effectiveness in this area.
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4.3.6.3 BASELINE SURVEY ON FINANCIAL EDUCATION
The FSDIP recommends the conduct of a baseline survey on financial literacy.
The ultimate aim of financial education is to achieve financial literacy. Financial education is
defined by OECD/International Network on Financial Education as ‘the process by which financial
consumers/investors improve their understanding of financial products, concepts and risks and,
through information, instruction and/or objective advice develop the skills and confidence to
become more aware of financial risks and opportunities to make informed choices, to know
where to go for help, and take other effective actions to improve their financial wellbeing’
The baseline survey will provide an initial measure of financial literacy to identify national levels
of financial literacy, provide a baseline and set benchmarks for a national strategy on financial
education.
The objectives of conducting the financial literacy baseline survey in Seychelles are as follows:
• Understand and assess the gaps and main needs regarding financial literacy and policy
areas that need particular attention by employing survey technique that is internationally
recognised;
• Serve as a tool to define specific target groups;
• Provide evidence on the population’s needs and at securing public and non-public
stakeholders’ support for the initiatives;
• Allow for comparison with other countries and identification of practices that may be
replicated;
• Inform the development of a national strategy on financial literacy that reaches to all
Seychellois, especially the most in need, develop knowledge and empowerment and seek
to improve outcomes in order to address the gaps that have been identified;
• Provide a baseline against which to measure future progress in the area of financial
literacy.
The procurement process for consultancy for the survey started in the last quarter of 2015. The
baseline survey is expected to be concluded in the first half of 2016. Further to this, work will
start on the national strategy on financial education.
4.3.6.4 SURVEY ON CONSUMER PROTECTION FRAMEWORK
In order to assist with the formulation of appropriate policies to address and strengthen
consumer protection in the country, the CBS plans to conduct a survey with consumers of
financial and payment services and products. This survey will be aimed at assessing the level of
consumer satisfaction in relation to the services and products provided by banks and SCU. This
will assist CBS in identifying areas of concern from the customers’ perspective and design
measures where appropriate to address same. The information gathered will also inform and
guide CBS in the development of the financial consumer protection framework.
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4.3.7 CREDIT INFORMATION SYSTEM
During the last quarter of 2015, there was an inception mission on credit reporting, which is a
component of the World Bank RAS program. The aim of the mission was to review the framework
under which the Credit Information System is operating, taking into account the World Bank
General Principles for Credit Reporting. The project seeks to enhance the CIS’ effectiveness and
its contribution to the credit management environment in Seychelles. Aspects that are being
considered include the following: increasing the coverage of institutions covered by the CIS;
enhancing the information contained on the credit reports; synchronising provisions of the CIS
law with other relevant laws, for example with respect to sharing of information and detailing
consumer rights. Operational aspects are also being reviewed in collaboration with the DICT. The
latter is assisting with enhancing the technological aspect of the CIS. The aim is to design and
implement a new CIS which will include improved security, comprehensive credit reporting and
more efficient administration. In sum, the objective is to secure the robustness of the
infrastructure to maximise the CIS functions in order to support its objective to assist in credit
risk management and promote credit discipline.
4.3.8 LEGAL FRAMEWORK FOR NBFIS SUPERVISED BY CBS
Non-bank institutions supervised by CBS include SCU, DBS and HFC. The FSDIP includes a
deliverable to formulate a single law which would provide clear and adequate powers to regulate
and supervise these institutions and any other non-bank institutions that may be brought within
CBS’ supervisory umbrella. The law will have consideration to existing laws that include specific
provisions related to the institution, e.g. the CU Act. It is also expected to consider prudential
requirements that are appropriate to the functions of these institutions. The project is a
component of the World Bank RAS program.
4.3.9 FSDIP
The FSDIP, as approved by Cabinet in November 2014, consolidates the endeavours to further
develop specific areas within the financial sector into a central plan which guides the work of
relevant authorities. These areas include review of the legal and regulatory framework in the
financial sector (including additional banking activities, payment systems and credit reporting),
financial market infrastructure, the capital market, access to finance, supervision of non-bank
financial institutions, consumer protection and human capacity in the financial sector. The
implementation of the FSDIP gained momentum during the year under review with the
finalisation of agreements with funding organisations towards many of the deliverables
contained within the FSDIP, for which TA is required. Co-financing from the organisation towards
the project is summarised in Table 4.2 hereunder.
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Table 4.2: Summary of Funded Projects
Date of Signing of Agreement
Amount Area Funded Responsible entities
World Bank RAS
October 2015 USD537,103 Review of legal framework for the CIS
CBS
Legal framework for additional banking activities
CBS
Legal framework for Non-Bank Financial Institutions
CBS
Legal framework for financial consumer protection
CBS and FSA
ICF August 2015 USD775,500 Consultancy for conduct of a baseline survey on financial literacy
CBS and FSA
Consultancy for formulation of a policy and strategy on Islamic banking and finance
CBS and FSA
Consultancy on investment banking and private banking
CBS and FSA
Consultancy for assessment of the remittances market
CBS
Consultancy for diagnostic study on Government payment
CBS and MFTBE
Consultancy for review of supervisory framework for collective investment scheme
FSA
Consultancy for review of the supervisory framework for capital market
FSA
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Capacity building for new banking activities, central securities depository, real time gross settlement system, financial sector consumer protection and repurchase agreement.
CSB and FSA
AfDB October 2015 USD706,587 Consultancy for feasibility study for Central Securities Depository
CBS and FSA
Consultancy for Real Time Gross Settlement system
CBS
Consultancy for repurchase agreement
CBS
Consultancy for National Strategy on Financial Education
CBS and FSA
Consultancy for Pension Supervisory Framework
FSA
Consultancy for Insurance Supervisory Framework
FSA
The FSDIP also entails a number of initiatives for which TA is not required and on which work is
being or will be undertaken. It also includes deliverables for which other entities are responsible
for, for example the Ministry of Finance, Trade and the Blue Economy as well as the Ministry of
Entrepreneurship Development and Business Innovation, which have oversight mainly over
deliverables related to access to finance.
Implementation of the project has added a new dimension to the co-operation amongst
stakeholders. The experience has been positive and has substantiated the FSDIP’s
recommendation for enhanced co-operation mechanism amongst the authorities towards further
efficiency and effectiveness in achieving the authorities’ objectives, and collaboratively, their
contribution to the country’s economic growth.
4.4 BMIO41 REORGANISATION PLAN
BMIO which was taken control of by CBS in November 2014, remained under CBS’ possession
during the year under review. In mid-February 2015 CBS pronounced the appointment of Mr
Huns Biltoo, a partner of KPMG Mauritius, as the reorganising agent of BMIO. Consistent with the
provisions of the FIA, the reorganising agent formulated a reorganisation plan, which was
circulated to all stakeholders, including the depositors. As per the law, having not been objected
by the stakeholders, this was submitted for the Supreme Court’s approval which was obtained in
June 2015. The reorganisation plan included the definition of a new risk appetite for BMIO,
41 There was a change in BMIO’s ownership structure in 2016 and the bank has been rebranded to Al Salam Bank Seychelles.
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implementation of new policies and procedures, staffing and capacity building, implementation
of new IT system, amongst others, the bulk of which had been implemented by the end of the year
under review. In December 2015, the Supreme Court extended the reorganisation plan to March
2016 in order to allow more time for the operating model to be aligned to the medium and long
term strategic priorities. It is noted that BMIO was able to re-establish correspondent banking
relationship after CBS’ take-over late in 2014.
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Appendix 1: Locations and contact details of banks’ branches, DBS, HFC and SCU
BANKS NAME ADDRES
S PHYSICAL ADDRESS OTHER DETAILS
Barclays Bank (Seychelles) Ltd
Main Branch P.O. Box 167
Independence Avenue Tel: 4383838
Victoria, Mahe E-mail: [email protected]
Barclays Commercial Centre
Albert Street Tel: 4383838
Victoria, Mahe
Barclays Providence Branch
Providence Industrial Estate, Mahe
Tel: 4383838
Barclays Airport Agency Seychelles International Airport
Tel: 4383838
Pointe Larue, Mahe
Barclays Retail Branch Baie Ste. Anne, Praslin Tel: 4232218
Barclays Retail Branch Pension Complex Tel: 4233344
Grand Anse, Praslin
Barclays La Digue Agency Gregoire's Complex Tel: 4234148
Anse Reunion, La Digue
Premier Center Capital City Building Tel: 4383838
Independence Avenue
Victoria, Mahe
Website: www.barclays.sc
Nouvobanq
Main Branch P.O. Box 241
Victoria House Tel: 4293000
Victoria, Mahe E-mail: [email protected]
Praslin Branch P.O. Box 4041
Horizon Complex Tel: 4232600
Baie Ste. Anne, Praslin E-mail: [email protected]
La Digue Branch Saffron Building Tel: 4235032
La Passe, La Digue E-mail: [email protected]
Eden Island Branch Ground Floor Eden Plaza
Tel: 4346200
Eden Island, Mahe E-mail: [email protected]
MCB (Seychelles) Ltd
Head Office P.O. Box 122
Caravelle House Tel: 4284555
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Victoria, Mahe Fax: 4322676
E-mail: [email protected]
Providence Office Providence Industrial Estate, Mahe
Tel: 4373829
Anse Royale Office Anse Royale, Mahe Tel: 4385800
Grand Anse Praslin Office
Grand Anse, Praslin Tel: 4233940
Cote D’or Office, Praslin Cote D'or, Praslin Tel: 4232605
La Passe, La Digue La Digue, La Digue Tel: 4234560
Eden Island Eden Plaza, Mahe Tel: 4346860
Website: www.mcbseychelles.com
Seychelles Commercial Bank
Head Office P.O. Box 531
Orion Mall Tel: 4294000
Victoria, Mahe E-mail: [email protected]
Anse Aux Pins Branch Anse Aux Pins, Mahe Tel: 4294124
E-mail: [email protected]
Grand Anse Praslin Branch
Grand Anse, Praslin Tel: 4233810
E-mail: [email protected]
La Digue Branch La Passe, La Digue Tel: 4234135
E-mail: [email protected]
Victoria Branch Kingsgate House Tel: 4294083
Victoria, Mahe E-mail: [email protected]
Corporate Branch Orion Mall Tel: 4294077
Victoria, Mahe E-mail: [email protected]
Habib Bank Ltd
P.O. Box 702
Sound & Vision House Tel: 4224371/4224372
Francis Rachel Street E-mail: [email protected]
Victoria, Mahe
BMI Offshore Bank
P.O. Box 672
Suite G-04 & G-07 & G-08
Tel: 4385600
Capital City Building Fax: 4385631
Victoria, Mahe Website: Formerly (www.bmi.com.sc)
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Presently www.alsalamseychelles.com
E-mail: Formerly ([email protected] )
Bank of Baroda
P.O. Box 124
Trinity House Tel: 4618000/4610333
Victoria, Mahe Tel: 4618001-10
Fax: 4324057
E-mail: [email protected]
Bank of Ceylon
P.O. Box 1599
Ground Floor Tel: 4611880/4611888/4611889
Oliaji Trade Centre Website: www.boc.lk
Francis Rachel Street E-mail: [email protected]
Victoria, Mahe [email protected]
Bank Al Habib Ltd
P.O. Box 1010
Suite 2-07 Tel: 4410040 -2
Victoria, Mahe
Capital City Building Fax: 4410044
Victoria, Mahe Email: [email protected] Website: https://www.bankalhabib.com
Development Bank of Seychelles
P.O Box 217
Independence Avenue Tel: 4224471
Victoria, Mahe E-mail: [email protected]
Housing Finance Company Limited
P.O Box 1112
1st Floor, Victoria House Tel: 4298400
Victoria, Mahe Fax: 4298463
Seychelles Credit Union P.O Box 342
Co-operative House Tel: 4610190
Victoria, Mahe E-mail: [email protected]
Website: www.scu.sc
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Appendix 2: Location of ATMs
Barclays Bank (Seychelles) Ltd MCB Seychelles
2 Independence Avenue, Victoria, Mahe 2 Head Office, Caravelle House, Victoria, Mahe
1 Albert Street, Victoria, Mahe 2 Mahe Trading Building, Victoria, Mahe
1 Deepam House Beau Vallon, Mahe 1 Providence Office, Mahe
1 Cable and Wireless, Victoria, Mahe 1 Seychelles International Airport, Pointe-Larue, Mahe
1 Providence Branch, Mahe 1 Anse Royale Office, Mahe
1 Seychelles International Airport, Pointe Larue, Mahe
1 IOT, Victoria, Mahe
1 Shopping complex, Anse Royale, Mahe 1 Eden Island, Mahe
1 Grand Anse Praslin Branch 1 Ephelia Resort, Port Launay, Mahe
1 Baie Ste Anne Praslin Branch 1 Beau-Vallon, Mahe
1 La Digue Branch 1 Grand Anse Praslin Office
1 Dockland's building, Victoria, Mahe 1 Cote D’or Office, Praslin
1 Cote D'or, Praslin 1 Airport, Grand Anse Praslin
1 Mont Fleuri, Mahe 1 La Passe, La Digue
1 Victoria Bus Station, Mahe
1 Sekaar's Shopping Centre, Takamaka, Mahe
Nouvobanq Seychelles Commercial Bank
1 Head Office, Victoria House, Mahe 1 Head Office, Orion Mall, Victoria, Mahe
1 Pirates Arms Building, Victoria, Mahe 1 Kingsgate House, Victoria, Mahe
1 Seychelles International Airport, Pointe Larue, Mahe
1 La Passe, La Digue
1 La Passe, La Digue 1 Airport, Grand Anse Praslin
1 Cote D'or, Praslin 1 Anse Aux Pins, Mahe
1 Beau-Vallon, Mahe 1 Unity House, Victoria, Mahe
1 Baie-Lazare, Mahe 1 Sun Properties & Resort, Beau Vallon, Mahe
1 Grand Anse, Mahe
1 IOT , Victoria, Mahe
1 Eden Plaza, Mahe
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Appendix 3: Location and contacts of BDC
CLASS A BDC
ARC Exchange (Pty) Ltd
1st floor Orion Mall, Victoria, Mahé Tel: 428 9553 / 271 7481
Fax: 432 3089
Paradise Computer Services, Victoria House, Victoria, Mahé
Tel: 428 9565
Email: [email protected]
Cash Plus Co. (Pty) Ltd
Olivier Maradan Building, Olivier Maradan Street, Victoria, Mahé Tel: 278 3660 / 278 3661 / 443 3333
Fax: 461 0666
Docklands Supermarket New Port Victoria
Jivan’s Building, Albert Street, Victoria, Mahé Tel: 278 3661
Van Hoi Building, 1st Floor, Providence Industrial Estate, Mahé
Coral Strand Hotel, Beau Vallon, Mahé
Tel: 423 7263
Ocean Plaza Building, Grand Anse, Praslin
Tel: 423 6272
Aarti Investment Building, Baie Ste Anne, Praslin Tel: 250 1021
Côte D’Or, Praslin
La Passe La Digue
Email: [email protected] / [email protected]
Doubleclick Exchange (Pty) Ltd
Doubleclick Internet Cafe, Maison La Rosiere, Palm Street, Victoria, Mahé
Hypermarket
Bois de Rose Avenue, Mahe
Block A, Room 1 Unity House
Victoria, Mahé
Breeze Garden,
Grand Anse Praslin, Praslin
Anse-Aux-Pins, Mahe Baie Ste Anne, Praslin
Providence, Mahe
Email: [email protected]
Tel: 432 5540 / 253 8123
GCC Exchange
Suite G-06 A , Ground Floor, Capital City Building, Independence Avenue, Victoria, Mahé Tel: 442 1000 / Fax: 442 1001
Email: [email protected]
Website: www.gccexchange.com
Jamboo Money Changer Ltd
Storey House Building, Revolution Avenue, Victoria, Mahé Email: [email protected] / [email protected]
Tel: 278 1399 / Fax: 441 5252
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JPL Exchange (Sey) Co. Ltd
Eden Plaza, Eden Island, Mahé
Pirates Arms building, Independence Avenue, Victoria, Mahé
Beau Vallon, Mahe
Email: [email protected] / [email protected]
Tel: 434 6615 / 251 1105 / 251 5153
Le Relax Bureau de Change Ltd
Allied Builders Head Office, Le Rocher, Mahé Email: [email protected] Tel: 438 0700/Fax: 434 4560
Mason’s Money (Pty) Ltd (trading as Mason’s Xchange)
Michel Building, Benezette Street, Victoria, Mahé
Eden Plaza, Eden Island, Mahé
Email: [email protected] Tel: 428 8801/Fax: 428 8810
Royale Growth (Pty) Ltd
Printec Press Holdings Building, Mont Fleuri, Mahé Tel: 461 1524 / Fax: 461 0429
Royale Florist Shop, Pirates Arms Building, Victoria, Mahé
Tel: 422 5680
Coco d’Or Hotel, Beau Vallon, Mahé Tel: 424 7331
Quincy Mall, Quincy Street, Victoria, Mahé
Tel: 461 1532
Email: [email protected] / [email protected]
Travel Change (Seychelles) Ltd (trading as Creole Exchange)
Mahé Trading Building, Victoria, Mahé Email: [email protected] / [email protected]
Tel: 429 7183 / 429 7183 / 429 7072 / 429 7125 / 271 1234
Fax: 422 5075
UAE Exchange (Sey) Ltd
Capital City Building, Victoria, Mahé Email: [email protected] / [email protected]
Tel: 442 3000/Fax: 442 3002
Vision Money Transfer Ltd
Sound and Vision House, Ground Floor, Francis Rachel Street, Victoria, Mahé Email: [email protected] / [email protected]
Tel: 422 4207 / Fax: 422 4995
Global Exchange (Pty) Ltd Lulu Exchange Ltd
Providence, Mahe Tel: 44343223 / 2814000 Fax: 4373848 Email: [email protected] Website: www.avgroup.sc
G-03 Ground Floor
Capital City Building
Victoria, Mahe Tel: 4610812 / 4610813 / 4610814 / 2864343
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Email: [email protected] Web: www.luluexchange.com
CLASS B BDCs
Anthrium Foreign Exchange (Pty) Ltd Best Exchange (Pty) Ltd
Kot Damoo Building, Anse Royale, Mahé Email: [email protected]
Tel: 441 1638 / 259 0592
Kannus store, Baie Ste Anne Praslin, Praslin Email: [email protected] /
Tel: 442 4445 / 272 5511 / 272 5555
Exotic Exchange (Pty) Ltd
C/o Maki Shop, Cote D’Or, Praslin
C/o Maki Shop, La Passe La Digue
Email: [email protected] / [email protected]
Tel: 277 7111
Ideal Money Changer (Pty) Ltd Mohan’s X’ Change Ltd
Pension Fund Complex, Grand Anse, Praslin Email: [email protected] Tel: 278 3165/ 251 3025
Fax: 423 7062
C/o Mohan’s Shopping Centre, Plaisance, Mahé Email: [email protected] Tel: 434 4290
Fax: 434 4610
Money Stretcher (Pty) Ltd Saymore (Pty) Ltd
Camion Hall Building, Victoria, Mahé
Tel: 251 6513
Email: [email protected] /
Seychelles International Airport, Pointe Larue, Mahé Tel: 437 3434 / 254 2500
Fax: 437 3695
Sylvie's Exchange (Pty) Ltd Thompson (Seychelles) Ltd
Mangroo’s Building, Beau Vallon, Mahé Email: [email protected]
Tel/Fax: 424 8125
Mahé Trading Building, State House Avenue, Victoria, Mahé
Email: [email protected]
Tel/Fax: 432 4779
Victoria Money Changer Ltd
Kandimathy Building, Market Street, Victoria, Mahé
Email: [email protected]
Tel: 432 1612 / 251 6945
Universal Money Changer (Pty) Ltd
Chez Deenu Supermarket, Quincy Street, Victoria, Mahé
Tel: 432 2639 / Fax: 432 4028
Deenu’s Mini Market, Premier Building, Victoria, Mahé
Tel: 4322059
Adam Moosa Building, Victoria, Mahé
Tel: 4325474
Email: [email protected]
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Vims Exchange Ltd
Baie Ste Anne Jetty, Baie Ste Anne, Praslin
Tel: 258 1110 / 258 4404
Fax: 423 6152
Praslin Airport, Grand Anse, Praslin
Tel: 276 2110
Email: [email protected]