CMF Publishes Regulatory Files for Supervision of Basel III Standards
CMF published the "regulatory files" on supervision of the implementation of Basel III standards in Chile. These files contain information on requirements for the solvency and effective equity limits (R01), regulatory capital instruments (R02), credit risk-weighted assets (R06), market risk-weighted assets (R07), and operational risk-weighted assets (R08). New tables have been added to the MSI [translated into English as "Manual of the Information System for Banks"], referring to the identification of exposures subject to credit risk, market risk, sub-factors of the Systemic Importance Index, and definition of time bands, among others. CMF also published a circular (N° 2.288), a resolution (N° 2256), a set of frequently asked questions, and a presentation on these regulatory files.
The requirements in these regulatory files apply to all banks incorporated in Chile as well as branches of foreign banks operating in the local market, providing information at local consolidated, global consolidated, and individual levels for each institution. The first regulatory files—R06, R07 and R08—must be submitted in July 2021, in accordance with the terms and frequencies stipulated in each of said files. The first report of the R01 file must be made in September 2021, while the first report of the R02 file must be submitted in December 2021. For files R13 on "bank book market risk" and R14 on concentration risk, CMF has delayed their final publication to the second half of 2022. The new dates established for publication and submission of files R13 and R14 will be informed in due course. In addition, after reviewing the regulations issued as part of the implementation process of Basel III standards, CMF published a new regulatory proposal that considers:
- Correcting references between different regulations and improving their wording for better understanding
- Clarifying operating conditions for determining group exposures and debt indicators
- Adjusting treatments that deviate from the latest Basel standards on operational risk
- Correcting treatment of exposures to land acquisition, development, and construction
- Clarifying treatments to compute regulatory capital
Some of these changes to Chapters 21-2, 21-6, and 21-8 of the Updated Compilation of Rules for Banks (RAN) require prior agreement of the Central Bank of Chile, in accordance with provisions of the General Banking Act. Thus, CMF is requesting feedback until May 10, 2021. However, proposal on the treatment of exposures to land acquisition, development, and construction will have a longer feedback period until June 26, 2021. Finally, CMF published a circular and a resolution related to accounting for Tier 2 capital instruments used as additional Tier 1 capital according to the limits established in Article 66 of the General Banking Law and the third transitory article of Law No. 21,130.
Related Links (in Spanish)
- Press Release on Regulatory Files and Consultation
- Circular on Regulatory Files (PDF)
- Resolution N° 2256 on Regulatory Files (PDF)
- Tables Related to Resolution N° 2256 (PDF)
- Consultation Page
- Circular on Accounting Treatment (PDF)
- Resolution on Accounting Treatment (PDF)
Comment Due Date: May 10, 2021/June 26, 2021
Keywords: Americas, Chile, Banking, Basel, Regulatory Capital, Credit Risk, Market Risk, Operational Risk, Reporting, General Banking Act, Pillar 2, Accounting, CMF
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
JFSA Issues Proposals Related to Financial Instruments StandardRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
