MAS alters regulatory requirements for COVID-hit banks

Banks can now adjust their capital buffers to support lending activities.

The Monetary Authority of Singapore will adjust certain regulatory requirements and supervisory programmes to help financial firms amidst the coronavirus pandemic.

Banks are urged to adjust their capital and liquidity buffers in order to support their lending activities. Until 30 September, banks are now allowed to recognise their regulatory loss allowance as capital in order to enhance their lending capacity, and the net stable funding ratio has been adjusted such that the amount of stable funding that banks must maintain for shorter-term loans is halved from 50% to 25%.

In addition, FIs are now urged to take into account the government’s fiscal assistance and banks’ relief measures in setting up accounting loan loss allowances, but MAS does not expect them to maintain higher allowances solely because relief measures are applied to these loans.

The regulator will defer the implementation of the final set of Basel III reforms, margin requirements for non-centrally cleared derivatives, and other new regulations by one year.

Moreover, the application of revised standards for risks, leverage ratio, output floor and related disclosure requirements as well as credit valuation adjustments will be delayed until 1 January 2023.

Regular onsite inspections and supervisory visits have also been suspended until further notice.

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