KUALA LUMPUR: Malayan Banking Bhd (Maybank), CIMB Group Holdings Bhd (CIMB) and Public Bank Bhd have been identified as Domestic Systemically Important Banks (D-SIBs) by Bank Negara Malaysia (BNM) in its policy document issued today.
D-SIBs are defined as banks whose distress or failure have the potential to cause considerable disruption to the domestic financial system and the wider economy, according to the central bank’s assessment methodology.
In a statement today, BNM said the higher capital requirements introduced for such banks will complement the regulatory framework in place to mitigate the risks posed by D-SIBs to the stability of the Malaysian financial system and the wider economy.
“The D-SIB framework has been informed by the Basel Committee on Banking Supervision’s (BCBS) framework for dealing with D-SIBs and the structural characteristics of the Malaysian banking system,” it said.
The central bank said a D-SIB is required to maintain higher capital buffers to meet regulatory capital requirements, including a Higher Loss Absorbency (HLA) requirement.
“This serves to increase a D-SIB’s capacity to absorb losses, thereby reducing its probability of distress or failure during periods of stress.
“In turn, this will contribute to a safer and more resilient Malaysian financial system,” it said.
According to BNM, Maybank, CIMB and Public Bank were identified as D-SIBs based on the 2018 data and the assessment methodology set out in the policy document.
In accordance with the framework, the applicable HLA requirement for these D-SIBs ranges between 0.5% and 1.0% of risk-weighted assets at the consolidated level.
The HLA requirement for these D-SIBs will come into effect Jan 31, 2021.
Moving forward, BNM said the list of D-SIBs will be updated annually and published together with the release of the bank’s Financial Stability Review in the second half of each year. – Feb 05, 2020, Bernama.