MAS Invites Comments on Draft Notices on Exposures to Single Counterparty Groups and On Minimum Asset Maintenance Requirements
Singapore, 13 Sep 2006...The Monetary Authority of Singapore (MAS) has released draft Notices setting out the detailed requirements for the proposed policy changes to section 29 of the Banking Act, and for the establishment of an asset maintenance framework for foreign bank branches.
2 The draft MAS Notice 639 on Exposures to Single Counterparty Groups sets out limits on exposures by a bank to single counterparty groups. It specifies the types of exposures to be included in these limits, the basis for computing the exposures, the approach for aggregating exposures to counterparties that pose a single risk, and the recognition of credit risk mitigation techniques. These changes are part of MAS' ongoing review of its regulations to ensure prudential standards remain relevant and are in line with international best practice.
3 The draft MAS Notice 640 on Minimum Asset Maintenance Requirements sets out the requirements for foreign bank branches to maintain a minimum level of eligible assets in Singapore. All foreign bank branches will be required to maintain eligible assets of not less than S$5 million in Singapore at all times. Full and wholesale banks will be subject to additional asset maintenance requirements that will be set in proportion to their liabilities. This is in view of the fact that full and wholesale banks are allowed greater access to Singapore dollar deposits from non-bank customers. The requirements seek to enhance protection for Singapore depositors, while allowing sufficient leeway for banks to allocate their assets internationally.
The draft Notices follow an earlier consultation on the draft Banking (Amendment) Bill 2006, which indicated that while the proposed Banking Act amendments give legal effect for the broad policy changes, the detailed requirements will be established via Notices. It is these Notices that are the subject of this consultation.