MAS issues response to feedback from consultation on proposed implementation of final Basel III reforms on credit risk capital and output floor requirements, consults on draft standards

28 April 2021

On 25 March 2021, the Monetary Authority of Singapore (“MAS”) issued (1) its response to feedback from its consultation on the proposed implementation of final Basel III reforms in relation to credit risk capital and output floor requirements (“Response”), and (2) a consultation paper on draft standards for credit risk capital and output floor requirements for Singapore-incorporated banks (“Draft Standards Consultation Paper”).

Response

On 7 May 2019, MAS consulted on the proposed implementation of the final Basel III reforms in Singapore. The Response sets out MAS’ response to the feedback received in relation to the proposals on credit risk capital and output floor requirements. Where appropriate, MAS has incorporated feedback received into the draft standards for credit risk capital and output floor requirements for Singapore-incorporated banks set out in the Draft Standards Consultation Paper.

Draft Standards Consultation Paper

The Draft Standards Consultation Paper seeks feedback on draft standards relating to credit risk capital and output floor requirements for Singapore-incorporated banks. The consultation closed on 26 April 2021.

The draft provisions in MAS Notice 637 on Risk Based Capital Adequacy Requirements for Banks Incorporated in Singapore take into account standards relating to credit risk capital and output floor requirements in the consolidated Basel Framework, published by the Basel Committee on Banking Supervision, that take effect from 1 January 2023.

The draft provisions in MAS Notice 637, relating to credit risk capital and output floor requirements, are set out in the Draft Standards Consultation Paper. As announced by MAS on 7 April 2020, MAS will implement the revised standards for credit risk capital and output floor from 1 January 2023, with transitional arrangements provided for implementation of the output floor until 1 January 2028. The draft amendments take into account the feedback received on the consultation paper on proposed implementation of the final Basel III reforms in Singapore issued in May 2019 and the Response.

The Draft Standards Consultation Paper follows an earlier consultation paper on draft standards for operational risk capital and leverage ratio requirements issued on 17 December 2020. MAS will consult on the draft standards for other areas of the Basel III reforms at a later date.

Reference materials

The following materials are available on the MAS website www.mas.gov.sg, from the webpages on the Consultation Paper on the Proposed Implementation of the Final Basel III Reforms in Singapore and the Consultation Paper on Draft Standards for Credit Risk Capital and Output Floor Requirements for Singapore-incorporated Banks: