MAS Revises Notices Related to Liquidity Risk and Covered Bonds

Below are the key highlights of the recently revised MAS Notices:

• Notice 651 on LCR disclosure applies to all domestic systemically important banks (D-SIBs) and internationally active banks. It sets out requirements for a bank to disclose quantitative and qualitative information about their LCR. It also sets out requirements for a bank to disclose information related to its internal liquidity risk measurement and management framework, as well as information to enable market participants to better understand its liquidity risk management and positions. The revised Notice 651 came into effect on July 01, 2022.
• Notice 652 on NSFR has been issued pursuant to sections 10C(1) and 65(2) of the Banking Act 1970 (the Act), while Notice 653 on NSFR disclosure has been issued pursuant to section 10B(1) of the Act. Both the Notices apply to all D-SIBs and internationally active banks. Notice 652 sets out the minimum all currency NSFR requirements that a bank has to comply with while Notice 653 sets out requirements for a bank to disclose quantitative and qualitative information about its NSFR. The revised Notice 652, and the related reporting template, as well as Notice 653 came into effect on July 01, 2022.
• Notices 649 and 1015 set out the minimum liquid assets requirements and the LCR requirements. Notice 649 has been issued pursuant to sections 38(1) and 65(2) of the Act and applies to all banks in Singapore, while Notice 1015 has been issued pursuant to section 38(1) as applied by section 55ZG(1) and section 65A(2) of the Act and applies to all merchant banks in Singapore. Along with other revisions, Forms 1 and 2 associated with Notice 649 have been updated. The revised Notice 649 and its associated forms as well as Notice 1015 came into effect on July 01, 2022.
• Notice 648 sets out the requirements that banks have to comply with when issuing covered bonds. These include cover pool assets and encumbrance limit, risk management requirements, and notification and other requirements. Notice 648 has been issued pursuant to section 55 of the Banking Act (Cap. 19) and is applicable to banks in Singapore. The revised Notice 648 came into effect on July 01, 2022.
• Notice 758 sets out the minimum cash balance (MCB) requirements that a bank has to comply with. Notice 758 has been issued pursuant to section 39(1) of the Act and applies to all banks in Singapore. A bank must, during a maintenance period, maintain in its Current Account and Custody Cash Account, an aggregate minimum cash balance of at least an average 3% of its average Singapore Dollar Qualifying Liabilities (computed during a computation period. The revised Notice 758 came into effect on July 01, 2022.

Keywords: Asia Pacific, Singapore, Banking, Securities, LCR, NSFR, Disclosure, Covered Bonds, Liquidity Risk, Basel, Merchant Banks, MAS