February 01, 2019

MAS published the response to feedback received on proposed amendments to MAS Notice 1111 on risk-based capital adequacy requirements for merchant banks in Singapore. Based on the responses received and certain other factors, MAS has decided not to proceed with the proposed amendments to MAS Notice 1111 and will continue to apply the existing requirements under this notice.

In October 2014, MAS had consulted on the amendments to MAS Notice 1111 to strengthen the capital framework for merchant banks by incorporating key components of the Basel III capital standards as were then set out by BCBS. Annex A contains the list of respondents to the consultation. Some respondents supported adopting key components of the Basel III capital standards in the capital framework for Singapore-incorporated merchant banks, to enhance their resilience in times of stress. Other respondents commented that the nature of activities and risks undertaken by merchant banks should be considered in determining the appropriate capital standards.

In December 2017, BCBS had finalized reforms to the Basel III capital standards that apply to internationally active banks, while giving national supervisors the discretion to apply prudential standards to banks that are not internationally active. In this context, MAS will not proceed with the proposed amendments to MAS Notice 1111. The existing risk-based capital requirements under MAS Notice 1111 will continue to apply to Singapore-incorporated merchant banks. MAS will consider the appropriateness of the revised Basel capital standards for merchant banks, and consult the industry on any proposed revisions.

 

Keywords: Asia Pacific, Singapore, Banking, Basel III, Capital Adequacy, Risk-based Capital Requirements, MAS Notice 1111, MAS

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