ROBUST, TRUSTED, DYNAMIC AND
PURPOSEFUL FINANCIAL CENTRE
- A ROBUST FINANCIAL CENTRE
- Industry Tests
- Enhancing the Resolution Regime
- International Supervisory Cooperation
- Securities, Futures and Over-the-Counter Derivatives
- Sectoral Security Operations Centre
A ROBUST FINANCIAL CENTRE
In April 2015, MAS issued a framework for identifying and supervising domestic systemically important banks (D-SIBs) in Singapore, and the inaugural list of D-SIBs. D-SIBs are banks that can have a significant impact on the stability of the financial system and the proper functioning of the broader economy. D-SIBs are required to comply with policy measures to address the risks that they can pose. These include local incorporation of retail operations for foreign bank branches with a significant retail presence, higher loss absorbency, recovery and resolution planning, and liquidity coverage ratio requirements.
In 2015, MAS conducted a thematic inspection of several banks in Singapore to assess the credit underwriting standards and practices of their corporate lending business. Overall, we observed that the banks' underwriting standards and practices were generally sound, though there were areas for improvement. In February 2016, we issued an information paper to share our observations from the thematic inspection with the industry.
Introducing Countercyclical Capital Buffer
MAS introduced the Countercyclical Capital Buffer (CCyB) on 1 January 2016. The CCyB is a part of the Basel III capital framework, and is intended to mitigate pro-cyclicality and protect the banking sector during stress periods. MAS supports the Basel Committee on Banking Supervision's objective to address the build-up of systemic risks from excessive broad-based credit growth, and has included the CCyB in its macroprudential toolkit. Based on prevailing economic and financial conditions, we have set a CCyB rate of 0% for Singapore.
Enhancing Regulatory and Licensing
MAS continues to review and enhance our regulatory framework for banks, benchmarking it against international standards. In 2016, MAS proposed amendments to the Banking Act to enhance depositor protection by strengthening prudential safeguards, corporate governance, and risk management controls of banks. The amendment Act was passed in Parliament in February 2016.
In June 2015, MAS also announced that we will remove the accounting divide between the Domestic Banking Unit (DBU) and the Asian Currency Unit (ACU). The DBU-ACU framework was implemented in 1968 to safeguard financial stability while facilitating growth of the Asian Dollar Market. While it has served us well, recent developments have reduced its relevance. Regulatory developments since the global financial crisis have broadly aligned the rules that govern banks' offshore activities and those for domestic banking businesses in Singapore. We will therefore remove the DBU-ACU divide to reduce administrative burden on banks.
MAS has streamlined the bank licensing framework by phasing out the Offshore Bank licence. The revised two-tier licensing framework distinguishes between Full Banks with access to the retail market and Wholesale Banks that specialise in wholesale business. MAS has stopped issuing Offshore Bank licenses since April 2016, and we will convert all existing Offshore Banks to Wholesale Banks over time.