MAS announced that it will adjust selected regulatory requirements and supervisory programs to enable financial institutions to focus on dealing with issues related to the COVID-19 pandemic. The announcement relates to adjusting capital and liquidity requirements of banks, deferring implementation of the final set of Basel III reforms, and extending reporting timelines. MAS will allow financial institutions to take into account the government’s fiscal assistance and banks’ relief measures in setting more realistic accounting loan loss allowances and will suspend regular onsite inspections and supervisory visits till further notice. Additionally, MAS announced a support package to sustain and strengthen capabilities in the financial services and fintech sectors amid the current economic slump. Finally, MAS extended the assessment period for the award of digital bank licenses, as it intends to announce successful applicants in the second half of 2020, rather than in June 2020.
Adjusting Capital and Liquidity Requirements for Banks
- MAS encourages banks to utilize their capital buffers as appropriate to support their lending activities.
- Sustaining lending activities should take priority over discretionary distributions. While MAS does not see a need to restrict banks’ dividend policies, the release of capital buffers should not be used to finance share buybacks during this period.
- MAS will allow banks to recognize as capital more of their regulatory loss allowance reserves. The relief will apply until September 30, 2021 and may be extended if necessary.
- Banks may also utilize their liquidity buffers, as necessary, to meet liquidity demands. To support lending activities of banks, MAS will adjust the net stable funding ratio requirement. The amount of stable funding that banks must maintain for loans to individuals and businesses that are maturing in less than six months will be reduced from 50% to 25%. The relief will apply until September 30, 2021 and may be extended if necessary.
Deferring Implementation of Regulatory Reforms
- MAS will defer by one year the implementation of the final set of Basel III reforms for banks in Singapore. MAS will defer to January 01, 2023 the implementation of revised standards for credit risk, operational risk, leverage ratio, output floor and related disclosure requirements, market risk, and credit valuation adjustments for supervisory reporting purposes.
- MAS will defer by one year the implementation of the final two phases of the margin requirements for non-centrally cleared derivatives. The new timeline is September 01, 2021 for a bank or a merchant bank whose group’s aggregate non-centrally cleared derivatives exposure is more than SGD 80 billion. Additionally, for a bank or merchant bank whose group’s aggregate non-centrally cleared derivatives exposure is more than SGD 13 billion and up to SGD 80 billion, the new timeline is September 01, 2022.
- MAS will extend by one year, to October 01, 2021, the final phase of the reporting requirements for over-the-counter derivatives trades.
- MAS will defer the implementation of certain licensing and conduct requirements, which were introduced under the Securities and Futures (Amendment) Act 2017 (Annex A). MAS will extend the transitional period for these requirements by one year to October 08, 2021.
- MAS will defer the certain new policies where consultations have closed (Annex B). Financial institutions will be provided sufficient time for transition to the new dates when announced. MAS will provide a longer response time to provide feedback to ongoing public consultations of new policies during this period. In addition, MAS will defer until further notice the public consultations on outsourcing requirements for banks and environmental risk management guidelines.
Extending Reporting Timelines and Deferring Industry Projects
- MAS will provide more latitude on submission timelines for regulatory reports. MAS will defer non-urgent industry projects.
- MAS will seek feedback from banks and merchant banks on potential challenges they may face in transiting to a more comprehensive reporting regime under the revised MAS Notices 610 and 1003. MAS will assess the need to defer the targeted implementation timeline from January 2021 to a later date.
Support Package for Financial Institutions and Fintech Firms
The support package has three main components—strengthening digitalization and operational resilience; enhancing fintech firms’ access to digital platforms and tools, and supporting workforce training and manpower costs. The support package will take immediate effect. MAS will provide all Singapore-based fintech firms with six months of free access to API Exchange (APIX), an online global marketplace and sandbox for collaboration and sales. Through APIX, fintech firms and financial institutions can integrate and test solutions via a cloud-based architecture.
Keywords: Asia Pacific, Singapore, Banking, Securities, COVID-19, Capital Requirements, Liquidity Requirements, Basel III, Reporting, Fintech, License Applications, MAS
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