Singapore to postpone bank capital rules

The Monetary Authority of Singapore (MAS) building in Shenton Way.
The Monetary Authority of Singapore (MAS) building in Shenton Way.ST PHOTO: FILE

HONG KONG • Singapore's banking regulator has told lenders it will delay by a year the implementation of global rules designed to rein in trading risks - the latest sign that the post-crisis overhaul of the world's banking system may be stalling.

The move follows similar postponements by banking regulators in Hong Kong and Australia as concerns grow over the complexity of the rules and as it is also uncertain how they will fit with other capital reforms yet to be finalised.

The Monetary Authority of Singapore (MAS) notified local banks of the delay to the so-called "fundamental review of the trading book (FRTB)" in a letter last month that also flagged a number of other regulatory issues, two people briefed on the matter said. The people declined to be identified as the letter was not made public.

The rules were finalised last year by the Basel Committee on Banking Supervision as part of a decade- long international effort to prevent a repeat of the global financial crisis.

The FRTB rules, which require banks to hold more capital against their trading books, were scheduled to become effective in January 2019.

A MAS spokesman said the regulator remains committed to a full implementation of Basel III reforms but was not rigidly adhering to a timeline.

"In determining the implementation timeline, MAS will consider factors such as the state of global implementation guidance, the industry's readiness and implementation progress in other jurisdictions," it said in a statement.

Basel has no powers of enforcement and relies on member countries to commit to the implementation of reforms agreed by the committee. A person familiar with the committee's workings said there was no sign of the FRTB being ditched outright.

In addition, capital for trading books is a small proportion of a bank's total buffer and therefore, a delay in the FRTB does not materially affect the bigger capital picture for the banking sector.

Group of 20 countries meet in Germany this week to take stock of the implementation of global banking reforms.

United States President Donald Trump has said regulation is holding back lending and the US Treasury has recommended delaying the FRTB, as well as another measure that strengthens bank funding.


A version of this article appeared in the print edition of The Straits Times on July 06, 2017, with the headline 'Singapore to postpone bank capital rules'. Print Edition | Subscribe