rundheersing bheenick : ensuring the financial stability of the banking system in mauritius address by mr rundheersing bheenick, governor of the bank of mauritius, on the occasion of the grant of a new banking licence to barclays bank mauritius limited, port louis, 23 may 2013. * * * i am delighted to welcome you all at the bank this afternoon. a special word of welcome to his excellency mr nicholas howard leake, the british high commissioner. we are very pleased to have you all with us on this occasion. today is an important day in the history of barclays in our country. after almost a century of operation in mauritius, barclays bank plc, mauritius branch is converting into a whollyowned subsidiary to be henceforth known as barclays bank mauritius limited. early this week, the president of the republic, acting on the advice of our prime minister, dr the hon navinchandra ramgoolam, frcp gcsk, appointed me to a new term as governor of the central bank. i am reminded that in august 2008, i revoked the banking licence of the nowdefunct first city bank and the equally - defunct south east asian bank to issue a new licence to their successors who are still thriving here which makes this a concatenation of four 3 ’ s. it is thus on the 3rd day of my 3rd three - year term as governor that i am proceeding to announce the revocation1 of the 3rd banking licence, and i believe the barclays people are actually rejoicing at this revocation! so are we at the bank of mauritius. a century ago, the central bank did not even exist – we are younger than barclays mauritius by almost two generations. today, as regulator and regulatee, we have a strong bond of partnership. we are placing this partnership on even firmer foundations by extending the legal arsenal available to the bank of mauritius and deploying it to such good effect in the barclays case. let me explain. nearly six years have passed since the global financial crisis unfolded. central bankers, commercial bankers, financial commentators, academics and other finance professionals have been on the case ever since, busily drawing lessons from this prolonged crisis. countless international fora have examined the appropriate policy frameworks to deal with issues identified as having exacerbated the crisis such as structures that were too complex and banks that were too - big - to - fail or too - connected - to -

fail. an international agreement on a cross - border resolution mechanism for internationally - active banks is not likely to be reached in the near future. we are waiting with bated breath for more rapid progress with the banking union at the level of the european union. we cannot wait for all the lessons to be learned and new institutions to be forged, before we, as regulator, reflect on how these lessons can be applied to our own banking system. our problem is somewhat smaller, and certainly less intractable – provided we have an open mind about it. someone has said : “ more powerful than the will to win is the courage to begin. ” in the case of barclays, we have amply demonstrated the courage to begin the process of restructuring. our banking sector is made up of 21 banks, of which five operate as branches of foreign banks. of these, we consider a few to be domestic systemically important banks ( dsibs ), in view of their size and complex structures. the global crisis highlighted two sources of vulnerability that the bank needs to address to ensure the stability of the domestic financial system. the first is the need to protect affiliates of cross - border banks operating in technically, it is a surrender of licence under section 11 ( 7 ) of the banking act 2004. bis central bankers ’ speeches our jurisdiction from any potential problem affecting their parents in their home country. the second vulnerability stems from the fact that the failure of a dsib could not only impair the provision of key financial services but also have knock - on effects on other parts of the domestic economy. these issues have been exercising my mind for quite some time. this is why i have been encouraging branches of foreign banks operating in mauritius to convert into locally - incorporated subsidiaries, and urging our dsibs to reduce the complexity of their structures by resorting to what is now labelled as “ ring - fencing. ” we have been setting the stage for some time. that is where barclays enters the scene, in pursuit of its “ one africa strategy ”. it is seeking to align the legal structure of its mauritius branch business with the rest of barclays africa entities. barclays sought our approval to become a wholly - owned subsidiary of barclays bank plc. barclays was the first of the targeted banks to do so. just as it had also been the first to set up a local advisory board for its branch operation in february 2012, well before we enshrined this in the revised guideline on corporate governance in