CMF Publishes Regulatory Files for Supervision of Basel III Standards
CMF published the "regulatory files" on supervision of the implementation of Basel III standards in Chile. These files contain information on requirements for the solvency and effective equity limits (R01), regulatory capital instruments (R02), credit risk-weighted assets (R06), market risk-weighted assets (R07), and operational risk-weighted assets (R08). New tables have been added to the MSI [translated into English as "Manual of the Information System for Banks"], referring to the identification of exposures subject to credit risk, market risk, sub-factors of the Systemic Importance Index, and definition of time bands, among others. CMF also published a circular (N° 2.288), a resolution (N° 2256), a set of frequently asked questions, and a presentation on these regulatory files.
The requirements in these regulatory files apply to all banks incorporated in Chile as well as branches of foreign banks operating in the local market, providing information at local consolidated, global consolidated, and individual levels for each institution. The first regulatory files—R06, R07 and R08—must be submitted in July 2021, in accordance with the terms and frequencies stipulated in each of said files. The first report of the R01 file must be made in September 2021, while the first report of the R02 file must be submitted in December 2021. For files R13 on "bank book market risk" and R14 on concentration risk, CMF has delayed their final publication to the second half of 2022. The new dates established for publication and submission of files R13 and R14 will be informed in due course. In addition, after reviewing the regulations issued as part of the implementation process of Basel III standards, CMF published a new regulatory proposal that considers:
- Correcting references between different regulations and improving their wording for better understanding
- Clarifying operating conditions for determining group exposures and debt indicators
- Adjusting treatments that deviate from the latest Basel standards on operational risk
- Correcting treatment of exposures to land acquisition, development, and construction
- Clarifying treatments to compute regulatory capital
Some of these changes to Chapters 21-2, 21-6, and 21-8 of the Updated Compilation of Rules for Banks (RAN) require prior agreement of the Central Bank of Chile, in accordance with provisions of the General Banking Act. Thus, CMF is requesting feedback until May 10, 2021. However, proposal on the treatment of exposures to land acquisition, development, and construction will have a longer feedback period until June 26, 2021. Finally, CMF published a circular and a resolution related to accounting for Tier 2 capital instruments used as additional Tier 1 capital according to the limits established in Article 66 of the General Banking Law and the third transitory article of Law No. 21,130.
Related Links (in Spanish)
- Press Release on Regulatory Files and Consultation
- Circular on Regulatory Files (PDF)
- Resolution N° 2256 on Regulatory Files (PDF)
- Tables Related to Resolution N° 2256 (PDF)
- Consultation Page
- Circular on Accounting Treatment (PDF)
- Resolution on Accounting Treatment (PDF)
Comment Due Date: May 10, 2021/June 26, 2021
Keywords: Americas, Chile, Banking, Basel, Regulatory Capital, Credit Risk, Market Risk, Operational Risk, Reporting, General Banking Act, Pillar 2, Accounting, CMF
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