CMF is consulting on the new regulatory files related to the implementation of Basel III standards in Chile. The proposal introduces a new system, called the Risk System, to the Information Systems Manual for banks, with the aim to facilitate supervision of the implementation of Basel III regulations. The proposed system sets out new reporting requirements for monitoring and evaluation of the requirements contained in Chapters 21-1 through 21-30 of the Updated Compilation of Rules for Banks (RAN). The submission of information will begin in the second half of 2021. The consultation is open until March 01, 2021. CMF also published a file on the rating of systemically important banks (File R11), for its inclusion in the Information Systems Manual. The published file is necessary to determine the systemic importance index of banks, according to the provisions established in Chapter 21-11 of RAN.
CMF completed the process of issuing the necessary regulations to implement the Basel capital framework in Chile on December 01, 2020. Due to the need to adequately gather all information required to monitor the capital adequacy of banks and the main risks they are exposed to, CMF developed a new "Risk System" that provides the necessary information to observe compliance with the new limits. The "Risk System" is formed by eight new normative files with 29 registries. These files contain specific instructions on how to report the requested information, establishing type and criteria, periodicity, and submission dates for each of the registries. Furthermore, the reporting guidelines are limited only to each bank's applicable combinations. The list of the new files is as follows:
- Solvency limits and effective equity (R01)
- Regulatory capital instruments (R02)
- Credit risk-weighted assets (R06)
- Market risk-weighted assets (R07)
- Operational risk-weighted assets (R08)
- Rating of systemically important banks (R11)
- Banking book market risk (R13)
- Concentration risk (R14)
File R11 was put out for public consultation between November 02 and December 02, 2020. It will focus on reporting of the index factors that determine the degree of a bank's systemic importance, related to what its financial deterioration or eventual insolvency would mean for the functioning of the local financial system. The considered factors include the bank size, interconnection with other financial institutions, the degree of substitution in the provision of financial services, and the complexity of business model and operating structure. After reviewing feedback from the industry, the descriptions associated with the sub-factors, necessary to construct the index, were adjusted to provide a greater degree of detail. On February 01, 2021, banks must submit their monthly information corresponding to 2020 through the Secure Information Submission (ESI) system. Later, within nine business days, banks must submit their information to CMF on a monthly basis, starting in February with the information for January 2021.
New tables will be introduced to the Information Systems Manual for banks, which will refer to the identification of exposures subject to credit risk, market risk, systemically important index sub-factors, and definition of time bands, among others. The requirements established in these normative files will apply to all banks incorporated in Chile as well as branches of foreign banks operating in the local market. Unless CMF dictates otherwise, the regulatory files of other systems containing information of a similar nature or which currently measure the risks described in the Basel III regulations must continue to be submitted simultaneously to the new files, without change. The submission of information will begin in the second half of 2021. Banks must submit information for files R06 through R08 in July; for files R01 and R02 in September; and for files R13 and R14 in December of each year.
Related Links (in English and Spanish)
- Press Release on Proposal for Regulatory Files
- Consultation on Regulatory Files
- Press Release on Publication of File R11
- Circular and Resolution on Publication of File R11
- Information Systems Manual
Comment Due Date: March 01, 2021
Keywords: Americas, Chile, Banking, Basel, Regulatory Capital, Reporting, Credit Risk, Market Risk, Operational Risk, Systemic Risk, CMF
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