Bank Negara Malaysia (‘BNM’) issued a policy document on the Domestic Systemically Important Banks Framework and a set of related Frequently Asked Questions on 5 February 2020.
The policy document sets out the assessment methodology used by BNM to identify Domestic Systemically Important Banks (‘D-SIB’) whose distress or failure have the potential to cause considerable disruption to the domestic financial system and the wider economy.
A D-SIB is required to maintain higher capital buffer (including a Higher Loss Absorbency (‘HLA’) requirement) to mitigate the risk posed to the stability of the Malaysian financial system and economy in the event of distress or failure of the D-SIB.
On the same day, BNM also designated three domestic banks as D-SIBs which will be required to maintain HLA requirements of 0.5% to 1.0% of risk-weighted assets (at consolidated level) commencing 31 January 2021.
BNM will publish an updated list of D-SIBs annually when it releases its Financial Stability Review in the second-half of each year.
This policy document supersedes the Domestic Systemically Important Banks Framework Survey issued on 10 October 2016.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
