Featured Product

    IMF Publishes Reports and Technical Note Under FSAP with Thailand

    October 24, 2019

    IMF published two reports and a technical note as part of the financial sector assessment in Thailand, under the IMF Financial Sector Assessment Program (FSAP). The technical note covers the risk assessment in the financial sector while the two reports address the detailed assessment of observance on the Basel Core Principles for Effective Banking Supervision (BCPs) and Insurance Core Principals (ICPs) in Thailand. Overall, the system in the country has been found to be generally compliant or largely compliant with BCPs and observant or largely observant on most ICPs.

    The report on detailed assessment of observance of BCPs highlights that there have been significant enhancements to the legal framework and the supervisory process since the last BCP review, resulting in high compliance. Out of the 29 BCPs, Thailand was assessed compliant with 25 principles and largely compliant with four principles. The assessment was performed from October 25 through November 16, 2018 and is based on the regulatory and supervisory framework in place. The Thai authorities welcomed certain recommendations, which included enhancing clarity of internal guidelines for preventive actions and Prompt Preventive/Corrective Action and revising regulation on asset classification, which is to be implemented in 2020 once IFRS 9 becomes effective. The asset classification and provisioning regulation falls short of international good practice in some areas, but the impact is limited and a revised regulation that complies with the international good practice will come into effect soon. The revised regulation of BOT, which addresses the observed gaps, will be implemented once IFRS 9 becomes effective in 2020. This will also bring the Thai accounting standards for financial instruments fully in line with IFRS.

    The report on detailed assessment of observance of ICPs provides an assessment of significant regulatory and supervisory practices in the insurance sector in Thailand. The current assessment is benchmarked against the ICPs issued by IAIS in October 2011, including revisions authorized up until December 2017. Out of the 26 ICPs, 10 ICPs were observed, 12 were largely observed, and four were partially observed. The ICPs that were partly observed are those on licensing, suitability of persons, changes in control and portfolio transfers, and cross-border cooperation and coordination on crisis management. The key recommendations in the report are intended to improve supervision follow for consideration by the Office of the Insurance Commission (OIC) and, where applicable, by other involved government agencies whose approval would also be necessary. The recommendations highlight that risk-based capital should include a provision for all relevant material risks. Moreover, supervisory measures regarding cross-border crisis management should be objectively applied based on stated criteria while the licensing, suitability, and control requirements should be reviewed and strengthened.

    The technical note on risk assessment concludes that the resilience of the banking system in Thailand was assessed under a battery of stress tests performed by the FSAP. The solvency stress test indicates that the largest banks can withstand an adverse scenario broadly as severe as the Asian financial crisis. Banks also appear to be resilient to sizable withdrawals of liquidity, though some would face increased funding pressures. The liquidity stress test on investment funds showed that they would be able to withstand a severe redemption shock and the impact on the banks and the bond market would be limited. An analysis of the interconnectedness and contagion in the banking sector and in the financial system at large did not find any particular vulnerabilities. BOT has continued to improve its stress testing framework since its first top-down solvency macro stress test in 2017. While BOT has a wide range of well-structured data, there is room for improvement, particularly on the time series of Internal Ratings-Based banks’ Probability of Defaults and Loss Given Default and data management for liquidity risk to ensure the availability of more granular data, including a finer breakdown by type.


    Related Links

    Keywords: Asia Pacific, Thailand, Banking, Insurance, Securities, Basel Core Principles, ICP, Stress Testing, LCR, IAIS, BOT, IMF

    Featured Experts
    Related Articles
    News

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    News

    EC Mandates ESAs to Propose Amendments to SFDR Technical Standards

    The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.

    May 11, 2022 WebPage Regulatory News
    News

    EBA Examines Supervisory Practices, Issues Deposits Reporting Template

    The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),

    May 11, 2022 WebPage Regulatory News
    News

    US Agency Publications Address Basel, Reporting, and CECL Developments

    The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances

    May 09, 2022 WebPage Regulatory News
    News

    SEC Extends Comment Period on Climate Risk Disclosures

    The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.

    May 09, 2022 WebPage Regulatory News
    News

    APRA Reduces Committed Liquidity Facility, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.

    May 09, 2022 WebPage Regulatory News
    News

    CMF Consults on Basel Rules, Presents Roadmap to Address Climate Risks

    The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.

    May 06, 2022 WebPage Regulatory News
    News

    PRA Issues Statement on NPEs and Policy on Trading Activity Wind-Down

    The Prudential Regulation Authority (PRA) issued a statement on the European Banking Authority (EBA) guidelines on management of non-performing exposures (NPEs) and forborne exposures.

    May 06, 2022 WebPage Regulatory News
    News

    EBA Updates Standards for 2023 Benchmarking of Internal Approaches

    The European Banking Authority (EBA) updated the implementing technical standards that specify the data collection for the 2023 supervisory benchmarking exercise in relation to the internal approaches used in market risk, credit risk, and IFRS 9 accounting.

    May 06, 2022 WebPage Regulatory News
    News

    EIOPA Responds to Stakeholder Views on Blockchain in Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published a feedback statement on the responses received to the consultation on blockchain and smart contracts in insurance.

    May 06, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8179