Featured Product

    BNM Consults on Requirements for Equity Investments by Financial Firms

    January 25, 2019

    BNM published a consultation (exposure draft) in the form of a policy document setting out the approval and notification requirements for equity interests held by financial institutions in corporations. This consultation applies to licensed banks, licensed investment banks, licensed Islamic banks, licensed insurers, licensed takaful operators, financial holding companies, and prescribed development financial institutions. Comment must be submitted by February 28, 2019. This policy document will come into effect on the date of publication of final policy document, save for the transitional arrangements.

    This exposure draft sets out the approval requirements of BNM for a financial institution to establish or acquire a subsidiary, or hold a material interest in any corporation in or outside Malaysia. It also sets out the scope of permissible equity investment in non-financial corporations by a financial institution. The prudential safeguards are being introduced to address risks from equity exposures, including a targeted prudential limit that is intended to replace the existing aggregate limits on equity-related exposures applied to banking institutions specified under the Guidelines on Investment in Shares, Interest-in-Shares, and Collective Investments Schemes (IIS) and IIS for Islamic banks. 

    The financial institutions are increasingly collaborating with, or hold material equity interest in, e-commerce activities and e-payments firms to realize business synergies. Thus, a review of the current requirement on equity investments is necessary to ensure that financial institutions continue to remain relevant, competitive, and are able to offer a fuller range of services to their customers. This policy document must be read together with other relevant legal instruments and policy documents that have been issued by BNM, particularly the following:

    • Approach to Regulating and Supervising Financial Groups
    • Capital Adequacy Framework (Basel II: Risk-Weighted Assets and Capital Components both)
    • Capital Adequacy Framework for Islamic Banks (Both Capital Components and Risk-Weighted Assets)
    • Risk-Based Capital Framework for Insurers and Takaful Operators
    • Single Counterparty Exposure Limit
    • Single Counterparty Exposure Limit for Islamic Banking Institutions

     

    Related Link: Consultation Paper (PDF)

    Comment Due Date: February 28, 2019

    Keywords: Asia Pacific, Banking, Insurance, Islamic Banking, Takaful Operators, Equity Investment, Equity Exposures, BNM

     

    Related Articles
    News

    APRA Publishes Proposal to Increase Transparency of Banking Data

    APRA proposed to substantially increase the volume and breadth of data it makes publicly available on authorized deposit-taking institutions, including banks, credit unions, and building societies.

    December 05, 2019 WebPage Regulatory News
    News

    ESMA Consults on Guide to Internal Controls for Credit Rating Agencies

    ESMA launched a consultation on the guidelines on internal controls for credit rating agencies (CRAs).

    December 05, 2019 WebPage Regulatory News
    News

    EU Finalizes Directive and Prudential Rules for Investment Firms

    EU published, in the Official Journal of the European Union, the Directive (2019/2034) and Regulation (2019/2033) on the prudential requirements and supervision of investment firms.

    December 05, 2019 WebPage Regulatory News
    News

    OSFI Revises Guideline on Principles for Management of Liquidity Risk

    OSFI finalized Guideline B-6 on the principles for the management of liquidity risk.

    December 05, 2019 WebPage Regulatory News
    News

    PRA Consults on Framework to Manage Outsourcing and Third-Party Risk

    PRA published a consultation paper CP30/19 that sets out proposals to modernize the regulatory framework on outsourcing and third-party risk management.

    December 05, 2019 WebPage Regulatory News
    News

    BoE, PRA, and FCA Consult to Strengthen Operational Resilience

    BoE, PRA, and FCA published a shared policy summary and coordinated consultation papers on new requirements to strengthen operational resilience in the financial services sector.

    December 05, 2019 WebPage Regulatory News
    News

    EC Amends Rule on Mapping of External Credit Assessment Institutions

    EC published the implementing regulation (EU) 2019/2028, which amends Regulation 2016/1799, regarding the mapping tables specifying correspondence between the credit risk assessments of external credit assessment institutions (ECAIs) and the credit quality steps set out in the Capital Requirements Regulation.

    December 04, 2019 WebPage Regulatory News
    News

    EBA Issues Second Part of Advice on Implementation of Basel III in EU

    EBA published the second part of its advice on the implementation of Basel III in EU, which complements the report published on August 05, 2019.

    December 04, 2019 WebPage Regulatory News
    News

    EU Approves European Council Proposal on CCP Recovery and Resolution

    EU ambassadors approved the position of European Council on a proposed framework for clearing houses and their authorities to prepare for and deal with financial difficulties.

    December 04, 2019 WebPage Regulatory News
    News

    OSFI Releases Guideline on Foreign Bank Branch Deposit Requirements

    OSFI released the final version of Guideline A-10 on foreign bank branch deposit requirements, along with guideline impact analysis statement.

    December 04, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4268