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
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous ArticleJFSA Issues Proposals Related to Financial Instruments Standard
OSFI Finalizes on Climate Risk Guideline, Issues Other Updates
The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.
BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending
BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.
HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks
The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.
BCBS Report Examines Impact of Basel III Framework for Banks
The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.
PRA Consults on Prudential Rules for "Simpler-Regime" Firms
Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.
DNB Publishes Multiple Reporting Updates for Banks
DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.
NBB Sets Out Climate Risk Expectations, Issues Reporting Updates
The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting
EBA Updates Address Securitization Standards and DGS Guidelines
The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.
FSB Publishes Letter to G20, Sets Out Work Priorities for 2023
The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023
ISSB Standards May Become Effective from January 2024
The International Organization of Securities Commissions (IOSCO) welcomed the confirmation statement by the International Sustainability Standards Board (ISSB) setting out its progress in the development of its first sustainability-related corporate disclosure standards.