On April 1,the Colombian Superintendence of Finance (SFC) published draft decree to adjust current regulations related to the technical equity and solvency margin of credit institutions. The agency thus hopes to bring regulations into line with those required under the Basel III requirements. In August last year, the Ministry of Finance and Public Credit issued a decree to align credit establishments in the country with the Basel III requirements. SFC will receive comments via email [email protected] up to and including April 22. The final version of the document is expected to be published in the weeks following this date.

What does the decree regulate?

The regulations seek to ensure the implementation of capital cushions, which will be 1% (systemic buffer) and 1.5% (capital conservation buffer) of assets weighted by credit and market risk. In addition, it seeks to align definitions of capital adequacy with Basel III, understood as the sum of the value of the ordinary basic assets (net of deductions) and the additional basic assets divided by the value of the assets weighted by level of credit and market risk. The capital adequacy ratio will have a minimum limit of 6%. In addition, the draft decree modifies the measurement of weighted assets by level of credit risk through the use of external ratings. These ratings must be carried out by a recognized risk rating agency, while the Colombian Financial Superintendence is responsible for establishing the relationships between the weighting categories contained in the proposal and the external ratings of the risk rating agencies.