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    BCBS Assesses NSFR and LE Rules in Argentina and China as Compliant

    November 07, 2019

    BCBS published reports that assess the implementation of net stable funding ratio (NSFR) and large exposures, or LE, framework in Argentina and China. These reports are a part of the Regulatory Consistency Assessment Program (RCAP) of the Basel Committee. Overall, the NSFR and the large exposures regulations in both jurisdictions have been assessed as "Compliant" with the global Basel Committee standards. This is the highest of the four possible assessment grades of Compliant, Largely Compliant, Materially Non-Compliant, and Non-Compliant.

    In Argentina, BCRA, which is the Central Bank of Argentina, implemented the NSFR framework on January 01, 2018 and NSFR disclosure framework on February 20, 2018. Both regulations are applied to all “Group A” banks in Argentina, which include all banks whose total assets are no less than 1% of the total assets of the Argentinian financial system. The large exposures framework was adopted by BCRA on January 01, 2019 for all banks operating in Argentina. BCRA agreed with the analysis and conclusions in the RCAP assessment reports, except a single correction regarding large exposures to credit risk, which was approved by the Board of BCRA and published at the end of June 2019. In the assessment, all components of the NSFR and large exposures regulations have been assessed as Compliant.

    In China, CBIRC implemented the NSFR standard via the regulations on minimum NSFR requirements, reporting, and disclosure. The rules on Liquidity Risk Management of Commercial Banks, which contain the minimum NSFR requirements, were revised in May 2018 and came into effect in July 2018. The Disclosure Rules on NSFR of Commercial Banks were issued in March 2019 and came into effect in March 2019. The notice on the off-site Supervisory Report of NSFR was revised in December 2018 and came into effect in January 2019. NSFR applies to all commercial banks with assets of at least CNY 200 billion; this includes the six commercial banks based in China that have been identified by CBIRC as internationally active banks. The rules were issued on July 01, 2018, with commercial banks required to implement the rules before December 31, 2018. The NSFR regulations in China have been assessed as Compliant with the Basel NSFR standards. Furthermore, the assessment on the domestic adoption of the Basel large exposures standard focused on the completeness and consistency of the domestic regulations in force on July 31, 2019. Overall, as of July 31, 2019, the large exposures regulations in China have been assessed as compliant with the Basel standard, except two deviations that were assessed as not material.

    These publications form part of the Regulatory Consistency Assessment Program (RCAP), through which the Basel Committee monitors the timely adoption of regulations by its members, assesses the regulations' consistency with the Basel framework, and examines the consistency of banks' calculation of the prudential ratios across jurisdictions. The next assessment reports will be on Hong Kong, Singapore, and Indonesia and these reports are expected to be published in March 2020. The Basel Committee plans to complete its review of the implementation of the NSFR and the large exposures framework for all member jurisdictions by March 2021. 

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    Keywords: Asia Pacific, Americas, China, Argentina, Banking, NSFR, Large Exposures, RCAP, Assessment, Basel III, BCBS

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