The Chairperson of the South Sudan Bankers’ Association (SSBA), Bruna Cirisio, has recommended that the Central Bank adopt the CAMELS rating system for stronger financial oversight.
The CAMELS rating system is based upon an evaluation of six critical elements of a credit union’s operations: Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity to Market Risk. According to the CAMELS system rating, 1 is considered the best while a rating of 5 is considered the worst.
Cirisio who was speaking during the launch of the Strengthening South Sudan’s Financial Sector (3SF) Project on Tuesday in Juba said the system will assist the Bank of South Sudan in implementing preventive measures to tackle the challenges faced by banks. She said the banks faced challenges, especially when their corresponding banks were doing due diligence because when asked which rating group they belonged to, some failed to answer.
“The bank rating system is based on the CAMELS approach and here in South Sudan we are not yet ready,” he highlighted. “Sometimes we find problems when our corresponding banks are doing due diligence. They ask the bank which rating group you are and we say we are not ready which is a shame.”
“So, the Bank of South Sudan, with this skill building, can rate the banks using the CAMEL approach which will aid the Central Bank in taking preventive measures to address the challenges band to take measures which at times come in when it is too late and beyond the risk of reputation and closure,” Cirisio added.
She said commercial banks in South Sudan face challenges in data collection, storage, and governance and that there is a lack of compliance by banks, especially with the national financial reporting standard.
“In data collection, storage, and governance, there is also a problem and banks will suffer from reconciliation because some of the data cannot be traced,” she stated.
The banker stressed that in the Central Bank, data governance is critical in ensuring that the data quality remains high through a complete life cycle of the data.
“In our situation now, we have a hyper-inflammatory economy. We are supposed to use the national accounting standard 29 which is used for hyper-inflammatory economy,” Cirisio said. “This is our case now in South Sudan but this is not implemented.”