Malaysia – Bank Negara Issues Framework On Domestic Systemically Important Banks.

Bank Negara Malaysia (“BNM”) issued the Domestic Systemically Important Banks (“D-SIB”) Framework policy document and a set of related Frequently Asked Questions on 5 February 2020. A D-SIB is a bank whose distress or failure has the potential to cause considerable disruption to the domestic financial system and the wider economy.

 

The D-SIB Framework, developed in line with the principles outlined by the Basel Committee on Banking Supervision, aims to strengthen the resilience of the Malaysian banking system and address the following elements

 

a) regulatory requirements and policy measures that may be applicable to D- SIBs, such as the higher loss absorbency requirement;

 

b) intensity of supervisory oversight by BNM; and

 

c) macroprudential surveillance activities of BNM.

 

The requirements include higher loss absorbency and reporting requirements applicable to financial institutions along with the assessment methodology employed to identify D-SIBs in Malaysia. The policy document supersedes the Domestic Systemically Important Banks Framework Survey issued on 10 October 2016.

 

Also on 5 February, BNM designated Maybank, CIMB, and Public Bank as D-SIBs. They will be required to maintain higher loss absorbency requirements of 0.5% to 1.0% of risk-weighted assets at consolidated level from 31 January 2021. BNM will update the list of D-SIBs annually and publish it together with the Financial Stability Review in the second-half of each year.