MAS Issues Notices on Capital Adequacy and Liquidity Risk Disclosures
The Monetary Authority of Singapore (MAS) published the Notice FHC-N649 on minimum liquid assets and liquidity coverage ratio (LCR), the Notice FHS-651 on LCR disclosures, the Notice FHC-652 on net stable funding ratio (NSFR), and the Notice FHC-N653 on NSFR disclosures for bank financial holding companies. Also published were the Notice FHC-N637 on risk-based capital adequacy requirements, the Notice FHC-N608 on Disclosures in Financial Statements, and the Notice FHC-N601 that sets out the definition of “Capital Funds” for financial holding companies.
Below are the key highlights of the recently revised MAS Notices:
- Notice FHC-N649 sets out the minimum liquid assets requirements and LCR requirements that a financial holding company must comply with. This notice has been issued pursuant to sections 34(1) and 38(2) of the Financial Holding Companies Act 2013 and applies to all financial holding companies that have a subsidiary that is a bank incorporated in Singapore and are predominantly banking designated financial holding companies. This notice came into effect on July 01, 2022.
- Notice FHC-N651 on LCR disclosures has been issued pursuant to section 60(1) of the Financial Holding Companies Act 2013. It sets out requirements for a financial holding company to disclose quantitative and qualitative information about its LCR. It also sets out requirements for a financial holding company 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 notice came into effect on July 01, 2022.
- Notice FHC-N652 on NSFR has been issued pursuant to sections 38(2) and 60(1) of the Financial Holding Companies Act 2013, while Notice FHC-N653 on NSFR disclosure has been issued pursuant to section 60(1) of the Act. Notice FHC-N652 sets out the minimum all-currency NSFR requirements that a financial holding company to comply with. Notice FHS-N653 sets out requirements for a financial holding company to disclose quantitative and qualitative information about its NSFR. Both the notices came into effect on July 01, 2022. Both the notices apply to all financial holding companies that have a subsidiary that is a bank incorporated in Singapore, are predominantly banking designated financial holding companies, and are internationally active designated financial holding companies or are entities within a group that is designated by MAS as a domestic systemically important bank (D-SIB).
- Notice FHC-N637 on risk-based capital adequacy requirements covers capital adequacy ratio and leverage ratio requirements for a financial holding company as well as the methodology and process for calculating these ratios. The notice also covers requirements for the internal capital adequacy assessment process of a financial holding company as well as public disclosure requirements for a financial holding company in relation to its capital adequacy and risk exposures. This notice has been issued pursuant to section 3(1), section 36(1), section 37(1), section 38(2), and section 60(1) of the Financial Holding Companies Act 2013. It applies to all financial holding companies that have a subsidiary that is a bank incorporated in Singapore and are predominantly banking designated financial holding companies. This notice came into effect on July 01, 2022.
- Notice FHC-N608 on disclosure in financial statements applies to all designated financial holding companies with a subsidiary that is a bank incorporated in Singapore. It sets out certain disclosure requirements by MAS on financial statements of such designated financial holding company, in addition to the requirements related to financial statements as specified in the Companies Act, including Accounting Standards prescribed under the Companies Act. This notice came into effect on July 01, 2022.
Keywords: Asia Pacific, Singapore, Banking, LCR, NSFR, Liquidity Risk, Basel, Financial Holding Companies, Regulatory Capital, Capital Adequacy, Disclosures, MAS
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