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    BNM Issues Policy Documents on D-SIB and Capital Adequacy Frameworks

    February 05, 2020

    BNM issued policy documents on the framework for domestic systemically important banks (D-SIBs) and on the capital adequacy frameworks for both conventional and Islamic banks. The policy on D-SIBs sets out the assessment methodology to identify D-SIBs in Malaysia and contains the inaugural list of D-SIBs. Also published were the frequently asked questions and the response to feedback received to the policy consultation, along with the associated reporting template, reporting interpretations, and submission instructions. Additionally, the capital adequacy frameworks (capital components) for conventional and Islamic banks set out the approach to compute regulatory capital adequacy ratios as well as the levels of ratios at which a financial institution is required to operate. The policy documents came into effect on February 05, 2020.

    The policy document on D-SIB framework sets out the higher loss absorbency (HLA) and reporting requirements applicable to financial institutions, along with the assessment methodology employed to identify D-SIBs in Malaysia. BNM, at its discretion, may impose additional requirements and policy measures as deemed appropriate to manage risks posed by D-SIBs. The banking groups identified as D-SIBs based on the 2018 data and the assessment methodology set out in the policy document are as follows: 

    • Malayan Banking Berhad (Bucket 2)
    • CIMB Group Holdings Berhad (Bucket 2)
    • Public Bank Berhad (Bucket 1)

    In accordance with the D-SIB framework, the applicable HLA requirement for the identified D-SIBs ranges between 0.5% to 1.0% of risk-weighted assets, at the consolidated level. The HLA requirement for these D-SIBs will come into effect on January 31, 2021. Going forward, BNM will annually update the list of D-SIBs and publish this list with the release of the Financial Stability Review in the second half of each year.


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    Effective Date: February 05, 2020

    Keywords: Asia Pacific, Malaysia, Banking, Islamic Banking, Basel III, Capital Adequacy Framework, D-SIBs, Reporting, HLA, BNM

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