Central Bank Directs Banks to Conduct Stress Tests to Monitor Suspicious Transactions
The Central Bank of Sudan issued special regulations for domestically systemically important banks to enhance financial stability, ensure compliance with international financial standards, and keep pace with developments and best practices.
The bank defined systemically important banks as those with significant size and market share that greatly influence the banking and financial sector, making them difficult to replace, and where any disruption could pose risks to the banking system, financial system, and the economy in general.
The bank classified banks into five categories based on their systemic importance at the local level:
- Category 5: 40% or more
- Category 4: 30% to less than 40%
- Category 3: 20% to less than 30%
- Category 2: 15% to less than 20%
- Category 1: 5% to less than 10%
The classification is based on indicators such as size, interconnectedness, substitutability, and complexity.
The Central Bank directed systemically important banks to comply with existing regulatory requirements and implement new ones, including maintaining a capital adequacy ratio ranging between 13% and 15.5%, depending on each bank’s level of systemic importance, and a core capital adequacy ratio between 5% and 7.5%.
Banks are required to develop a detailed capital plan appropriate to their complexity and business activities, including financial forecasts covering at least five years, setting priorities, and evaluating the effectiveness of measures to mitigate the negative impacts of unexpected events.
They are also required to maintain flexibility in adjusting capital plans to support better decision-making under changing conditions, and to submit these plans annually to the General Administration of Banking Supervision by the end of December.
The Central Bank emphasized the importance of detailed capital planning that reflects contributions from all relevant departments, including risk management, finance, and treasury, and ensures the effectiveness of the plan.
Boards of directors and executive management are instructed to participate in preparing, reviewing, and approving capital plans at least once a year or as needed in case of changes, and to consult specialized institutions with expertise before submitting them to the Central Bank.
Banks are also required to increase the capital charge for operational risk coverage to 25% instead of 15%, comply with governance requirements, submit direct reports to the board’s risk committee, and ensure the accuracy, timeliness, and availability of financial data to the board.
Furthermore, banks must strengthen anti-money laundering and counter-terrorism financing measures by conducting quarterly stress tests to assess the effectiveness of technical systems for detecting suspicious transactions and ensuring the adequacy of related scenarios and indicators.
The Central Bank also directed that risks related to money laundering and terrorism financing be included in institutional stress tests, reflecting potential impacts such as fines, loss of correspondent banking relationships, operational and financial consequences, and reputational risks. Banks must also ensure transparency and disclosure regarding capital adequacy, liquidity risks, and credit concentration, and submit more frequent regulatory reports to the Central Bank as required.
