In February 2007, MAS announced changes to the capital adequacy requirements for Singapore-incorporated banks. The Tier 1 capital adequacy ratio (CAR) requirement was lowered from 7% to 6%, while the total CAR requirement of 10% remained unchanged. A broader range of instruments has been recognised as Tier 2 capital. Tier 2 capital can now include instruments with a shorter maturity and which do not necessarily provide for deferment of coupons or write-down of principal. In addition, the circumstances under which MAS may allow the early redemption or repurchase of capital instruments have been clarified. The new rules came into effect on 1 March 2007.
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