Featured Product

    CMF Issues Rule for Identification of Systemically Important Banks

    November 02, 2020

    CMF issued a regulation for the identification of systemically important banks and the determination of additional requirements for these institutions, in accordance with the international standards and the General Banking Act (LGB). To this end, CMF has incorporated Chapter 21-11 to the Updated Compilation of Rules for Banks (RAN) and has amended Chapter 12-14 of RAN. This is the fifth regulation issued by CMF according to its schedule to implement Basel III standards in Chile. CMF also published a regulatory report evaluating the impact of the regulation, along with a set of frequently asked questions (FAQ) and presentations on the regulation. The regulation will come into force on December 01, 2020.

    The new regulation considers establishing a Systemic Importance Index by entity, based on four factors that reflect the local impact of its financial deterioration or potential insolvency. These factors are size, interconnection, substitutability, and complexity of the entity. Depending on the value of this index, a range is established for additional requirements according to the General Banking Act. The process of identifying systemic banks and determining the additional requirements applicable will be carried out annually. It will be based on the information to be reported by the banks for calculating the Systemic Importance Index. With information as of the end of 2019, it is estimated that six banks would be classified as systemically important and, together, they would require additional core capital of nearly USD 1.25 billion. 

    The results of the process of identifying systemically important banks, and their additional requirements, will be informed through a well-founded resolution with prior agreement of the Central Bank of Chile, as of March 2021. The additional requirements derived from the first application may be constituted gradually, beginning in December 2021 and ending in December 2025 at a rate of an additional 25% per year. Furthermore, interested parties can comment on the measurement file of the systemic importance index to December 02, 2020. Once the fields have been adjusted and published in the Information Systems Manual, all banks must send the information monthly to CMF within the stated timeframes. Until March 01, 2021, banks must send monthly information corresponding to 2020 for the first identification of systemically important banks.

     

    Related Links (in English and Spanish)

    Effective Date: December 01, 2020

    Keywords: Americas, Chile, Banking, Basel, Systemic Risk, General Banking Act, Systemically Important Bank, Regulatory Capital, CMF

    Featured Experts
    Related Articles
    News

    HKMA Finalizes Policy Modules on Group-Wide Approach and Remuneration

    The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.

    July 29, 2021 WebPage Regulatory News
    News

    EBA Guide to Monitor Threshold for Intermediate Parent Undertakings

    The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).

    July 28, 2021 WebPage Regulatory News
    News

    PRA Finalizes Approach to Supervision of International Banks

    In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.

    July 26, 2021 WebPage Regulatory News
    News

    FCA Issues PS21/9 on Implementation of Investment Firms Regime

    The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.

    July 26, 2021 WebPage Regulatory News
    News

    EBA Proposes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.

    July 26, 2021 WebPage Regulatory News
    News

    IOSCO Proposes Recommendations on ESG Ratings and Data Providers

    The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.

    July 26, 2021 WebPage Regulatory News
    News

    ESMA Group Issues Recommendations on RFR Switch in Interdealer Market

    The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.

    July 26, 2021 WebPage Regulatory News
    News

    ECB Study Assesses Impact of Basel III Finalization Package

    The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.

    July 26, 2021 WebPage Regulatory News
    News

    ISDA Finds FRTB Results in Higher Capital Charges for Carbon Trading

    The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.

    July 26, 2021 WebPage Regulatory News
    News

    PRA Updates Remuneration Policy Statement Templates and Tables

    The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.

    July 26, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7311