MAS Consults on Credit Risk Capital and Output Floor Requirements
MAS proposed standards for credit risk capital and output floor requirements for banks incorporated in Singapore, with the comment period ending on April 26, 2021. The proposed standards will be covered in the MAS Notice 637 on risk-based capital adequacy requirements. Also published were the associated proposed reporting schedules for credit risk capital, capital ratio, capital buffers, and output floor requirements. In addition to the consultation, MAS also published its response to the feedback received on the May 2019 proposals on credit risk capital and output floor requirements.
The amendments proposed in the current consultation consider the feedback received on the May 2019 consultation as well as the MAS response to feedback on the May 2019 proposals on credit risk capital and output floor requirements. In the consultation from May 2019, MAS had proposed revisions to the risk-based capital requirements and leverage ratio requirements for banks incorporated in Singapore; these revisions were proposed to implement the final Basel III reforms published by BCBS, covering the minimum capital requirements for market risk (published in January 2019) and the revised standards for credit risk, credit valuation adjustment, operational risk, output floor, and the leverage ratio (published in December 2017).
In this consultation paper, Annex B on credit risk capital and output floor requirements sets out the proposed MAS Notice 637 provisions (with proposed changes highlighted in red), including the reporting forms. MAS is seeking comments on the draft provisions for credit risk capital requirements in Part II (Definitions), Part VI (Definition of Capital), Part VII (Credit Risk), and Part XII (Reporting Schedules) and on the draft provisions for the output floor requirements in Part II (Definitions), Part IV (Capital Adequacy Ratios and Leverage Ratio), Part V (Output Floor), and Part XII (Reporting Schedules) of the MAS Notice 637 in Annex B. MAS had earlier announced that it will implement the revised standards for credit risk capital and output floor from January 01, 2023, with the transitional arrangements provided for implementation of the output floor till January 01, 2028. At a later date, MAS plans to also consult on other reporting schedules under Part XII and on other elements of:
- Part II for other areas of the Basel III reforms, including definitions of terms related to market risk and credit valuation adjustment capital requirements (used in the draft provisions included in this consultation paper)
- Capital adequacy ratios and leverage ratio under Part IV for other areas of the Basel III reforms
- Part VI on definition of capital
Comment Due Date: April 26, 2021
Keywords: Asia Pacific, Singapore, Banking, Basel, Reporting, Regulatory Capital, Credit Risk, Output Floor, Notice 637, MAS
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.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
HMT Issues Draft Instrument to Amend CRR in UKRelated Articles
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
FSB Reports Assess NBFI Sector and Progress on LIBOR Transition
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.
