The Financial Services Agency of Japan (JFSA) published results of its third survey on use of LIBOR, consultation on amendments to the "Comprehensive Guidelines for Supervision of Major Banks etc," and final amendments to the regulatory notices on leverage ratio requirements and disclosure form for global systemically important banks (G-SIB) assessment (Pillar 3). In addition, the Bank of Japan (BOJ) released the results of a consultation on conducting a market functioning survey on climate change.
Below are the key highlights of the recent updates:
- JFSA, together with the Bank of Japan (BOJ), conducted a joint survey of financial institutions, including banks, securities companies, and insurance companies, regarding their use of LIBOR. The results highlight that financial institutions will be required to take actions for the transition away from panel-based LIBOR for which the publication was ceased at the end of December 2021. Institutions will be also required to take actions for the transition away from the synthetic USD LIBOR, for which the publication will be ceased at the end of June 2023. JFSA will require financial institutions to take necessary actions, based on the results of this survey, and will continue to monitor the progress in the transition.
- JFSA is consulting on draft amendments to the "Comprehensive Guidelines for Supervision of Major Banks, etc," following the revised assessment methodology for identifying G-SIBs, which the Basel Committee on Banking Supervision (BCBS) has most recently published. JFSA intends to reflect the revisions on the assessment methodology for identifying domestic systemically important banks (D-SIBs) in Japan, thereby providing corresponding amendments to the said comprehensive guidelines and other relevant and applicable guidelines. Public comments will be accepted until April 28, 2022.
- JFSA the amendments to the regulatory notices pertaining to leverage ratio requirements and to the regulatory notice pertaining to the disclosure form for G-SIB assessment (Pillar 3). The amendments mainly pertain to take another two-year temporal measure (until the end of March 2024) for excluding the outstanding balance of financial institutions' current accounts at BOJ from the calculation of the leverage ratio exposures. The amendments also include changes to the disclosure form for G-SIB assessment in the capital adequacy ratio regulations (Pillar 3) in accordance with international standards. The amendments took effect on March 31, 2022.
- Based on results of the BOJ consultation on market functioning survey on climate change, BOJ has decided to revise and conduct the survey annually, with plans to conduct the first annual survey in fiscal 2022. The consultation included proposals related to survey topics, frequency of the survey, and scope of survey respondents. BOJ received comments from 45 entities.
Keywords: Asia Pacific, Japan, Banking, LIBOR, Interest Rate Benchmarks, Survey Results, Basel, G-SIBs, D-SIBs, Pillar 3, Disclosures, Leverage Ratio, Climate Change Risk, ESG, BOJ, JFSA, Benchmark Reforms
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
Previous ArticleBCBS Issues Climate Risk Principles while HKMA Expresses Its Support
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
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.
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.
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.
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.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
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.
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.
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
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.