Monetary Authority of Singapore Annual Report 2011/2012
Our Work

SAFETY AND SOUNDNESS OF FINANCIAL INSTITUTIONS AND FINANCIAL SYSTEM

Strengthening Capital Requirements for Singapore-incorporated Banks

In June 2011, MAS announced that Singapore-incorporated banks will be required to meet capital adequacy standards that are higher than the Basel III capital standards issued by the Basel Committee on Banking Supervision (BCBS). This takes into account the substantial retail presence and systemic importance of these banks in Singapore.

MAS will require Singapore-incorporated banks to meet the Basel III minimum standards by 1 January 2013, ahead of the BCBS’ January 2015 timeline. MAS’ existing minimum requirement for Total CAR will remain unchanged at 10%. In addition, MAS will require Singapore-incorporated banks to meet a minimum Common Equity Tier 1 capital adequacy ratio (CAR) of 6.5%, Tier 1 CAR of 8% and Total CAR of 10% from 1 January 2015. Taking into account the capital conservation buffer requirement of 2.5%, Singapore-incorporated banks will have to maintain at least 9% Common Equity Tier 1, compared to the Basel III minimum of 7%. The higher capital requirements further strengthen the ability of Singapore-incorporated banks to operate under stress conditions, and will help reduce risks to the economy and safeguard financial stability.

In December 2011, MAS issued a consultation paper on the proposed amendments to MAS Notice 637 to implement the Basel III capital standards in Singapore. The amendments will take effect from 1 January 2013. To strengthen remuneration disclosures made by Singapore-incorporated banks, MAS also implemented the BCBS’ Pillar 3 remuneration disclosure requirements in December 2011. These requirements support the disclosure of clear, timely and comparable information on remuneration practices, consistent with the Financial Stability Board’s (FSB) principles and standards for sound compensation practices.