Bank resolution and deposit insurance
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Individual Reform: Bank resolution and deposit insurance 2026 - 2027

SARB empowered to manage systematically important financial institutions (SIFIs) failures.

No data available for the deliverable: SARB empowered to manage systematically important financial institutions (SIFIs) failures.

No data available for the deliverable: SARB empowered to manage systematically important financial institutions (SIFIs) failures.

No data available for the deliverable: SARB empowered to manage systematically important financial institutions (SIFIs) failures.

No data available for the deliverable: SARB empowered to manage systematically important financial institutions (SIFIs) failures.

No data available for the deliverable: SARB empowered to manage systematically important financial institutions (SIFIs) failures.

Summary

The Corporation for Deposit Insurance (CODI) is operational, with premium collection commencing from April 2024 and resolution protocols in place, aligning South Africa with global best practices.

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Is it working?

The implementation of CODI marks a major advancement in South Africa’s financial stability framework, offering automatic deposit protection up to R100,000 per bank and aligning the country with global standards on deposit safety. CODI’s flat-rate premium model offers simplicity and broad coverage, but it appears to not account for risk differentials across institutions, which may embed inefficiencies and cross-subsidies that may affect both competitive positioning and long-term cost dynamics. While CODI has improved crisis preparedness, the resolution funding mechanism remains untested. South Africa now meets international standards for bank resolution.

Actions

The system is fully effective, with strong depositor protection and market confidence. Actions include approval of resolution for 18 SIFIs with 3 simulated exercises conducted. Operational since June 2023, CODI integration was completed April 2024.

Are there plans?

CODI is live, premiums are being collected, public awareness campaigns are ongoing and resolution protocols have been tested.

Is it on the agenda?

Bank resolution and deposit insurance are flagship reforms for the SARB and National Treasury, highlighted in recent budgets and regulatory strategies.

Goals

To provide a robust framework for orderly bank resolution and depositor protection, minimising systemic risk and safeguarding public confidence.

References

Departments / Govt Institutions

National Treasury South African Reserve Bank (SARB)

Summary

The Corporation for Deposit Insurance (CODI) is operational, with premium collection commencing from April 2024 and resolution protocols in place, aligning South Africa with global best practices. SARB strengthened resolution mechanisms and codified powers to protect depositors of systemically important banks, with CODI and FSCA support, after major reforms in 2023-2025. SARB completed full implementation of CODI with new bank resolution powers and industry outreach for SIFI oversight.

Canvas not supported.

Is it working?

The implementation of CODI marks a major advancement in South Africa’s financial stability framework, offering deposit protection up to R100,000 for qualifying depositors if their bank fails, aligning the country with global standards on deposit safety. CODI’s flat-rate premium model offers simplicity and broad coverage, but it appears to not account for risk differentials across institutions, which may embed inefficiencies and cross-subsidies that may affect both competitive positioning and long-term cost dynamics. While CODI has improved crisis preparedness, the resolution funding mechanism remains untested. South Africa now meets international standards for bank resolution. With CODI operating fully, sector stability is improved and coverage has expanded.

Actions

The system is fully effective, with strong depositor protection and market confidence. Actions include approval for 18 systematically important financial institutions (SIFIs), with three simulated exercises conducted. Operational since June 2023, CODI integration was completed by April 2024. Teh deposit insurance fund has been launched and SIFI protocols are now standard sector practice.

Are there plans?

CODI is live, premiums are being collected, public awareness campaigns are ongoing and resolution protocols have been tested. Annual SIFI stress tests are planned as well as sector drills under a proactive supervision regime.

Is it on the agenda?

Bank resolution and deposit insurance are flagship reforms for the SARB and National Treasury, highlighted in recent budgets and regulatory strategies. SARB and CODI featured in the Cabinet financial cluster and Parliament annual review cycles.

Goals

To provide a robust framework for orderly bank resolution and depositor protection, minimising systemic risk and safeguarding public confidence. The objective is to achieve systemic stability, deposit protection and SIFI managementrn

References

Departments / Govt Institutions

National Treasury South African Reserve Bank (SARB)

Summary

The Financial Sector Laws Amendment Act 23 of 2021 (FLSAA) designates the SARB as the Resolution Authority and establishes a statutory deposit insurance scheme, including the Corporation for Deposit Insurance (CODI) and a Deposit Insurance Fund (DIF), within the Financial Sector Regulation Act framework. CODI was created as a SARB subsidiary on 24 March 2023 and became operational on 1 April 2024, providing explicit protection for qualifying depositors up to R100 000 per depositor per bank in the event that the SARB places a bank in resolution. The key deliverables are: (i) a fully effective statutory resolution regime under the FSR Act and FSLAA, with SARB formally designated as resolution authority for systemically important financial institutions; and (ii) an operational CODI that administers the DIF. The DIF is to be funded by levies and monthly premiums from member banks, supports Single Customer View and reimbursement processes, and can reimburse qualifying depositors up to R100 000 per depositor per bank through pre‑planned payout mechanisms

Canvas not supported.

Is it working?

The framework now meets core global good‑practice standards: CODI provides automatic, ex‑ante funded coverage for vulnerable depositors and materially reduces the need for ad hoc taxpayer‑funded bailouts, while SARB holds formal resolution powers to manage failing banks.The system’s effectiveness will depend on ongoing testing of payout speed, data quality for SCV, the adequacy of the R100 000 coverage limit (which currently fully covers about 9 in 10 qualifying depositors) and the calibration of premiums relative to risk across different member institutions.

Actions

President Ramaphosa signed the FSLAA into law in January 2022 and the finance minister’s commencement schedule brought key resolution and deposit‑insurance provisions into force, establishing CODI under the FSR Act. SARB then structured CODI as a wholly owned subsidiary, with all South African commercial, mutual, co‑operative and local branches of foreign banks required by law to become members, paying levies and premiums into the DIF, and SARB and CODI have since issued public FAQs, coverage/reporting rules and operational guidance and formally launched CODI in April 2024.

Are there plans?

Authorities are refining resolution plans for individual banks, continuing supervisory stress‑testing of SIFIs, enhancing Single Customer View and data/reporting rules (including exemptions and transitional reporting requirements to September 2025) and updating CODI coverage and operational rules through regulations and CODI guidance.
rn

Is it on the agenda?

Resolution and deposit insurance reforms feature in National Treasury’s financial‑sector reform narrative (Budget Review 2026) and in SARB communications on financial stability and the launch of CODI, including the official 24 April 2024 SARB/GCIS statement on CODI’s launch and role in the safety net.

Goals

To strengthen South Africa’s ability to resolve failing banks in an orderly way, while protecting small depositors and safeguarding financial stability through a statutory, pre‑funded deposit insurance scheme.

References

Departments / Govt Institutions

National Treasury South African Reserve Bank (SARB)

Summary

The Financial Sector Laws Amendment Act 23 of 2021 (FLSAA) designates the SARB as the Resolution Authority and establishes a statutory deposit insurance scheme, including the Corporation for Deposit Insurance (CODI) and a Deposit Insurance Fund (DIF), within the Financial Sector Regulation Act framework. CODI was created as a SARB subsidiary on 24 March 2023 and became operational on 1 April 2024, providing explicit protection for qualifying depositors up to R100 000 per depositor per bank in the event that the SARB places a bank in resolution. The key deliverables are: (i) a fully effective statutory resolution regime under the FSR Act and FSLAA, with SARB formally designated as resolution authority for systemically important financial institutions; and (ii) an operational CODI that administers the DIF. The DIF is to be funded by levies and monthly premiums from member banks, supports Single Customer View and reimbursement processes, and can reimburse qualifying depositors up to R100 000 per depositor per bank through pre‑planned payout mechanisms

Canvas not supported.

Is it working?

The framework now meets core global good‑practice standards: CODI provides automatic, ex‑ante funded coverage for vulnerable depositors and materially reduces the need for ad hoc taxpayer‑funded bailouts, while SARB holds formal resolution powers to manage failing banks.The system’s effectiveness will depend on ongoing testing of payout speed, data quality for SCV, the adequacy of the R100 000 coverage limit (which currently fully covers about 9 in 10 qualifying depositors) and the calibration of premiums relative to risk across different member institutions.

Actions

President Ramaphosa signed the FSLAA into law in January 2022 and the finance minister’s commencement schedule brought key resolution and deposit‑insurance provisions into force, establishing CODI under the FSR Act. SARB then structured CODI as a wholly owned subsidiary, with all South African commercial, mutual, co‑operative and local branches of foreign banks required by law to become members, paying levies and premiums into the DIF, and SARB and CODI have since issued public FAQs, coverage/reporting rules and operational guidance and formally launched CODI in April 2024.

Are there plans?

Authorities are refining resolution plans for individual banks, continuing supervisory stress‑testing of SIFIs, enhancing Single Customer View and data/reporting rules (including exemptions and transitional reporting requirements to September 2025) and updating CODI coverage and operational rules through regulations and CODI guidance.
rn

Is it on the agenda?

Resolution and deposit insurance reforms feature in National Treasury’s financial‑sector reform narrative (Budget Review 2026) and in SARB communications on financial stability and the launch of CODI, including the official 24 April 2024 SARB/GCIS statement on CODI’s launch and role in the safety net.

Goals

To strengthen South Africa’s ability to resolve failing banks in an orderly way, while protecting small depositors and safeguarding financial stability through a statutory, pre‑funded deposit insurance scheme.

References

Departments / Govt Institutions

National Treasury South African Reserve Bank (SARB)

Analyst: Tinashe Kambadza
Status: completed
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