BNM Finalizes Net Stable Funding Ratio Requirements for Banks
BNM finalized the requirements for net stable funding ratio (NSFR) for the licensed banks, licensed investment banks, and licensed Islamic banks in Malaysia. BNM published the policy document and reporting template on NSFR, in addition to its response to the feedback received on the consultation for NSFR requirements. The policy document will come into effect on July 01, 2020. The policy document supersedes the observation period reporting obligations under the Basel III Observation Period Reporting (Net Stable Funding Ratio), which were issued on March 23, 2018.
A banking institution shall comply with the requirements in this policy document at the consolidated level and shall maintain a minimum NSFR of 100% at all times. If NSFR of a banking institution falls below the minimum level, the banking institution shall notify BNM immediately, with an explanation of the cause of the decline and remedial measures taken or to be taken (with a proposed time frame) to bring the NSFR position into compliance. BNM will consider the reasons for the decline in the NSFR as provided by the banking institution, including prevailing market conditions, before deciding on the necessity and nature of a supervisory response. A banking institution shall submit the NSFR report on a quarterly basis and shall submit the electronic copy of the reporting templates to BNM through the Statistical Mart for Analysis and Reporting (STATsmart) system no later than 30 calendar days after the quarter-end reporting date.
The NSFR is a minimum standard that requires banking institutions to maintain a stable funding profile to support their assets and off-balance sheet activities. A stable funding profile reduces the likelihood of a banking institution’s liquidity position being severely eroded by material disruptions to its regular sources of funding. Under such circumstances, the viability of the banking institution may be put, or perceived to be, at risk. This could subsequently lead to broader systemic stress. The NSFR complements the Liquidity Coverage Ratio (LCR), which has been in effect in Malaysia since June 01, 2015. While LCR encourages the short term resilience (30 days) of a banking institution’s liquidity risk profile, NSFR aims to reduce funding risk over a time horizon of up to one year.
Related Links
- Notice
- Policy Document (PDF)
- Reporting Template (XLSX)
- BNM Response to Feedback (PDF)
- Consultation on NSFR (PDF)
Effective Date: July 01, 2020
Keywords: Asia Pacific, Malaysia, Banking, NSFR, Basel III, Liquidity Risk, Reporting, NSFR Template, BNM
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Karen Moss
Senior practitioner in asset and liability management (ALM) and liquidity risk who assists banking clients in advancing their treasury and balance sheet management objectives
Previous Article
EIOPA Publishes Q&A on Regulations in July 2019Related Articles
US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
EBA Issues Guide on Bank Resolvability, Consults on Transferability
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).
MFSA Publishes CRD5 Updates and Supervisory Priorities for 2022
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.
HKMA Extends Repayment for Trade Facilities, Consults on Crypto-Assets
The Hong Kong Monetary Authority (HKMA) published a circular, along with the reporting form and instructions, for self-assessment, by authorized institutions, of compliance with the Code of Banking Practice 2021.
FCA Registers Securitization Repositories; PRA Issues 2022 Priorities
The Financial Conduct Authority (FCA) decided to register European DataWarehouse Ltd and SecRep Limited as securitization repositories under the UK Securitization Regulation, with effect from January 17, 2022.
EC Regulation Sets Out Methods for Measuring K-Factors Under IFR
The European Commission (EC) published the Delegated Regulation 2022/25, which supplements the Investment Firms Regulation (IFR or Regulation 2019/2033) with respect to the regulatory technical standards specifying the methods for measuring the K-factors referred to in Article 15 of the IFR.
BIS Studies How Platform Models Impact Financial Stability & Inclusion
The Bank of International Settlements (BIS) published a paper that assesses the ways in which platform-based business models can affect financial inclusion, competition, financial stability and consumer protection.
CBE Issues Additional Measures to Ease Disruptions from Pandemic
The Central Bank of Egypt (CBE) published a circular with instructions on emergency liquidity assistance to banks that are unable to meet their liquidity requirements.
ESAs Publish List of Financial Conglomerates for 2021
The European Supervisory Authorities (ESAs) published the list of identified financial conglomerates for 2021.
APRA Licenses Two More Banks, Reduces Committed Liquidity Facility
The Australian Prudential Regulation Authority (APRA) updated the list of authorized deposit-taking institutions, granting license to Barclays Bank PLC and Crédit Agricole Corporate and Investment Bank to operate as foreign authorized deposit-taking institutions under the Banking Act 1959.
