BNM Finalizes Net Stable Funding Ratio Requirements for Banks
BNM finalized the requirements for net stable funding ratio (NSFR) for the licensed banks, licensed investment banks, and licensed Islamic banks in Malaysia. BNM published the policy document and reporting template on NSFR, in addition to its response to the feedback received on the consultation for NSFR requirements. The policy document will come into effect on July 01, 2020. The policy document supersedes the observation period reporting obligations under the Basel III Observation Period Reporting (Net Stable Funding Ratio), which were issued on March 23, 2018.
A banking institution shall comply with the requirements in this policy document at the consolidated level and shall maintain a minimum NSFR of 100% at all times. If NSFR of a banking institution falls below the minimum level, the banking institution shall notify BNM immediately, with an explanation of the cause of the decline and remedial measures taken or to be taken (with a proposed time frame) to bring the NSFR position into compliance. BNM will consider the reasons for the decline in the NSFR as provided by the banking institution, including prevailing market conditions, before deciding on the necessity and nature of a supervisory response. A banking institution shall submit the NSFR report on a quarterly basis and shall submit the electronic copy of the reporting templates to BNM through the Statistical Mart for Analysis and Reporting (STATsmart) system no later than 30 calendar days after the quarter-end reporting date.
The NSFR is a minimum standard that requires banking institutions to maintain a stable funding profile to support their assets and off-balance sheet activities. A stable funding profile reduces the likelihood of a banking institution’s liquidity position being severely eroded by material disruptions to its regular sources of funding. Under such circumstances, the viability of the banking institution may be put, or perceived to be, at risk. This could subsequently lead to broader systemic stress. The NSFR complements the Liquidity Coverage Ratio (LCR), which has been in effect in Malaysia since June 01, 2015. While LCR encourages the short term resilience (30 days) of a banking institution’s liquidity risk profile, NSFR aims to reduce funding risk over a time horizon of up to one year.
Related Links
- Notice
- Policy Document (PDF)
- Reporting Template (XLSX)
- BNM Response to Feedback (PDF)
- Consultation on NSFR (PDF)
Effective Date: July 01, 2020
Keywords: Asia Pacific, Malaysia, Banking, NSFR, Basel III, Liquidity Risk, Reporting, NSFR Template, BNM
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.
Karen Moss
Senior practitioner in asset and liability management (ALM) and liquidity risk who assists banking clients in advancing their treasury and balance sheet management objectives
Previous Article
CFTC Deems Australian Uncleared Swap Margin Rule to be ComparableRelated Articles
FDIC Proposes Amendments to Real Estate Lending Standards
FDIC is seeking comments on a rule to amend the interagency guidelines for real estate lending policies—also known as the Real Estate Lending Standards.
MAS Amends Notices on Risk-Based Capital Adequacy Requirements
MAS revised Notices 637 and 1111 on the risk-based capital adequacy requirements, along with Notice 656 on the exposures to single counterparty groups for banks incorporated in Singapore.
ISDA Consults on Implementation of Fallbacks for Certain Swap Rates
ISDA is consulting on the implementation of fallbacks for the sterling LIBOR ICE Swap Rate and for the USD LIBOR ICE Swap Rate.
US Agencies Set Out Unified Agenda for Planned Regulatory Actions
SEC announced that the Office of Information and Regulatory Affairs released the Spring 2021 Unified Agenda of Regulatory and Deregulatory Actions.
BIS and BoE Launch Innovation Hub in London
BIS and BoE launched the BIS Innovation Hub Center in London, which is the fourth new Innovation Hub Centre to be opened in the past two years.
ESRB Recommends Reciprocation of Certain Macroprudential Measures
ESRB published recommendations on the reciprocation of macro-prudential measures in Belgium, France, Luxembourg, Norway, and Sweden.
MAS Amends Regulatory Notices Applicable to Banks in Singapore
MAS revised multiple notices that are applicable to banks and merchant banks in Singapore and have been issued pursuant to the Banking Act (Cap 19).
EC Publishes Regulation on Key Aspects of Implementation of SA-CCR
EC published the Delegated Regulation 2021/931, which supplements the Capital Requirements Regulation (CRR or Regulation 575/2013) with regard to the regulatory technical standards specifying the method for identifying derivative transactions with one or more than one material risk driver.
BCBS Consults on Prudential Treatment of Cryptoasset Exposures
BCBS is consulting on preliminary proposals for the prudential treatment of cryptoasset exposures of banks.
EBA Revises List of Validation Rules for Reporting
EBA issued a revised list of validation rules under the implementing technical standards on supervisory reporting.
