IMF published its staff report under the 2018 Article IV consultation with Singapore. Directors noted that the financial sector remains healthy, with adequate buffers and strong balance sheets for banks. Directors welcomed the efforts of the authorities to strengthen the regulatory framework in line with Basel III principles and to enhance the anti-money laundering/countering the financing of terrorism (AML/CFT) framework.
The report reveals that staff welcomes the authorities’ efforts to strengthen the regulatory framework in line with Basel III principles. The authorities implemented a leverage ratio requirement of 3% and revised securitization framework from January 2018, along with the adoption of liquidity requirements. All domestic systemically important banks are required to meet the Net Stable Funding Ratio requirements on all currency level since January 2018, in addition to the Liquidity Coverage Ratio requirements. Moreover, in July 2017, enhancements to the resolution regime was introduced, including statutory bail-in, recovery and resolution planning, and creditor compensation framework. Overall, the asset quality of the banking system has improved and provisioning buffers remain adequate. Industry-wide stress tests show that the banking system is resilient to a significant deterioration in external and domestic conditions and sector-specific shocks. The authorities, however, consider that banks’ liquidity management warrants closer monitoring. They also noted that banks’ diversified funding sources and liquid assets, which are well above the regulatory minimum, are important mitigating factors. It is also recommended that the authorities should closely monitor the banking system’s rising foreign currency loan-to-deposit ratio for non-bank exposures.
Additionally, the report highlights that Singapore is a financial hub with global innovation aspirations. MAS appropriately supports development of a fintech ecosystem while adapting financial regulations to the changing landscape. Risks associated with fintech developments are closely monitored and increasingly integrated in the supervisory agenda. Risks related to ML/TF, cyber-security, and consumer protection are also carefully being monitored. MAS has been at the forefront of cross-border regulatory cooperation: it has established a regional industry sandbox in partnership with International Finance Corporation and ASEAN Bankers Association and has put in place information-sharing arrangements on fintech developments. Staff also welcomed the authorities’ support of the industry’s development of potential technological solutions to AML/CFT risks using regulatory technology (regtech) and supervisory technology (suptech), including the launch of the AML/CFT Industry Partnership (ACIP) Work Group on data analytics.
Moreover, the Directors encouraged the authorities to continue to support the development of a fintech ecosystem while regulations would require adaptation to emerging risks. Directors also noted that the upcoming 2019 FSAP intends to examine the financial sector issues in detail and will follow up on the emerging risks, including fintech-related risks and their implications for the banking sector.
Related Link: Staff Report
Keywords: Asia Pacific, Singapore, Banking, Article IV, Basel III, Fintech, Regtech, Suptech, IMF
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.
ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.
ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.