Featured Product

    BNM Consults on Requirements for Equity Investments by Financial Firms

    January 25, 2019

    BNM published a consultation (exposure draft) in the form of a policy document setting out the approval and notification requirements for equity interests held by financial institutions in corporations. This consultation applies to licensed banks, licensed investment banks, licensed Islamic banks, licensed insurers, licensed takaful operators, financial holding companies, and prescribed development financial institutions. Comment must be submitted by February 28, 2019. This policy document will come into effect on the date of publication of final policy document, save for the transitional arrangements.

    This exposure draft sets out the approval requirements of BNM for a financial institution to establish or acquire a subsidiary, or hold a material interest in any corporation in or outside Malaysia. It also sets out the scope of permissible equity investment in non-financial corporations by a financial institution. The prudential safeguards are being introduced to address risks from equity exposures, including a targeted prudential limit that is intended to replace the existing aggregate limits on equity-related exposures applied to banking institutions specified under the Guidelines on Investment in Shares, Interest-in-Shares, and Collective Investments Schemes (IIS) and IIS for Islamic banks. 

    The financial institutions are increasingly collaborating with, or hold material equity interest in, e-commerce activities and e-payments firms to realize business synergies. Thus, a review of the current requirement on equity investments is necessary to ensure that financial institutions continue to remain relevant, competitive, and are able to offer a fuller range of services to their customers. This policy document must be read together with other relevant legal instruments and policy documents that have been issued by BNM, particularly the following:

    • Approach to Regulating and Supervising Financial Groups
    • Capital Adequacy Framework (Basel II: Risk-Weighted Assets and Capital Components both)
    • Capital Adequacy Framework for Islamic Banks (Both Capital Components and Risk-Weighted Assets)
    • Risk-Based Capital Framework for Insurers and Takaful Operators
    • Single Counterparty Exposure Limit
    • Single Counterparty Exposure Limit for Islamic Banking Institutions

     

    Related Link: Consultation Paper (PDF)

    Comment Due Date: February 28, 2019

    Keywords: Asia Pacific, Banking, Insurance, Islamic Banking, Takaful Operators, Equity Investment, Equity Exposures, BNM

     

    Related Articles
    News

    BIS Report Notes Existing Gaps in Climate Risk Data at Central Banks

    A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.

    July 29, 2022 WebPage Regulatory News
    News

    EBA Publishes Multiple Regulatory Updates for Regulated Entities

    The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.

    July 29, 2022 WebPage Regulatory News
    News

    APRA Consults on Prudential Standard for Operational Risk

    The Australian Prudential Regulation Authority (APRA) is seeking comments, until October 21, 2022, on the introduction of CPS 230, which is the new cross-industry prudential standard on operational risk management.

    July 28, 2022 WebPage Regulatory News
    News

    EC Amends Rule on Securitizations; ESRB Updates Reciprocation Measures

    The European Commission published a Delegated Regulation 2022/1301 on the information to be provided in accordance with the simple, transparent, and standardized (STS) notification requirements for on-balance-sheet synthetic securitizations.

    July 27, 2022 WebPage Regulatory News
    News

    APRA Announces Revisions to Capital Framework for Banks

    The Australian Prudential Regulation Authority (APRA) is announced revisions to the capital framework for authorized deposit-taking institutions to implement the "unquestionably strong" capital ratios and the Basel III reforms.

    July 26, 2022 WebPage Regulatory News
    News

    EBA Examines Remuneration Data and Use of Large Exposure Exemptions

    The European Banking Authority (EBA) published a report that examines the use of certain exemptions included in the large exposures regime under the Capital Requirements Regulation (CRR).

    July 22, 2022 WebPage Regulatory News
    News

    UK Authorities Publish Discussion Paper on Critical Third Parties

    The Bank of England (BoE), the Prudential Regulation Authority (PRA), and the Financial Conduct Authority (FCA) published a joint discussion paper that sets out potential measures to oversee and strengthen the resilience of services provided by critical third parties to the financial sector in UK.

    July 22, 2022 WebPage Regulatory News
    News

    BoE Issues Update on Ongoing Data Transformation Program

    The Bank of England (BoE) issued a communication to firms to provide an update on the progress of the joint data transformation program—which is being led by BoE, the Financial Conduct Authority (FCA), and the industry—for the financial sector in UK.

    July 21, 2022 WebPage Regulatory News
    News

    EBA Issues Draft Methodology and Templates for 2023 Stress Tests

    The European Banking Authority (EBA) published the draft methodology, templates, and template guidance for the European Union-wide stress test in 2023.

    July 21, 2022 WebPage Regulatory News
    News

    EBA Issues SREP Guidelines and Standards for Investment Firms

    The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) jointly published the final guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) for investment firms.

    July 21, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8407