MAS to ensure Capital Strength for Singapore Banks

On 28 June 2011, MAS announced that it will require Singapore-incorporated banks to meet capital adequacy requirements that are higher than the Basel III global capital standards. MAS will require Singapore-incorporated banks to meet a minimum Common Equity Tier 1 (“CET1”) capital adequacy ratio (“CAR”) of 6.5%, Tier 1 CAR of 8% and Total CAR of 10% from 1 January 2015. These standards are higher than the Basel III minimum requirements of 4.5%, 6% and 8% for CET1 CAR, Tier 1 CAR and Total CAR, respectively.

MAS will also require Singapore-incorporated banks to meet the Basel III minimum capital adequacy requirements from 1 January 2013, two years ahead of the Basel Committee on Banking Supervision’s 2015 timeline.

The Basel III capital standards also seek to improve the consistency, transparency and quality of the capital base and strengthen the risk coverage of bank capital rules. MAS plans to adopt these standards and will consult on the text of its rules later this year.

Further details are available here.