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.
Effective Date: February 05, 2020
Keywords: Asia Pacific, Malaysia, Banking, Islamic Banking, Basel III, Capital Adequacy Framework, D-SIBs, Reporting, HLA, BNM
Previous ArticleFED Releases Hypothetical Scenarios for Stress Test Exercise in 2020
The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.
The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.
The European Banking Authority (EBA) published the final report on the guidelines specifying the criteria to assess the exceptional cases when institutions exceed the large exposure limits and the time and measures needed for institutions to return to compliance.
The Prudential Regulation Authority (PRA) issued the policy statement PS20/21, which contains final rules for the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies.
The European Banking Authority (EBA) revised the guidelines on stress tests to be conducted by the national deposit guarantee schemes under the Deposit Guarantee Schemes Directive (DGSD).
The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.
The Hong Kong Monetary Authority (HKMA) issued a circular, for all authorized institutions, to confirm its support of an information note that sets out various options available in the loan market for replacing USD LIBOR with the Secured Overnight Financing Rate (SOFR).
The Office of the Comptroller of the Currency (OCC) issued a new "Problem Bank Supervision" booklet of the Comptroller's Handbook. The booklet covers information on timely identification and rehabilitation of problem banks and their advanced supervision, enforcement, and resolution when conditions warrant.