PETALING JAYA: Malaysia’s three largest banking groups - Malayan Banking Bhd, CIMB Group Holdings Bhd and Public Bank Bhd will be able to “comfortably comply” with the new capital requirements for domestic systemically important banks (D-SIBs), according to a note from RAM Ratings.
RAM Ratings’ co-head of financial institution ratings Wong Yin Ching said the three D-SIBs have ample room to meet the stricter capital requirements without having to raise additional capital.
“We believe the implementation of the framework will be positive for the Malaysian banking industry as it will enhance large financial institutions’ ability to withstand shocks while safeguarding the sector’s stability in times of stress.
“Notably, the D-SIB additional capital requirements in Malaysia are less stringent than those of other regional jurisdictions and there are also fewer identified D-SIBs,” Wong said.
Based on their relative systemic importance, Maybank and CIMB have been placed in Bucket 2 while PBB is in Bucket 1.
Bucket 2 necessitates an additional common equity tier-1 (CET-1) capital surcharge of 1% of a bank’s risk weighted assets above the existing minimum of 7% while Bucket 1 attracts an additional 0.5%.
As at end-September 2019, the three D-SIBs’ capital buffers ranged from 4.5- 6.4 percentage points above their new minimum requirements.
On Jan 31, Bank Negara Malaysia (BNM) released the D-SIB framework which will come into effect on Jan 31, 2021.
The policy framework imposes more stringent capital requirements on D-SIBs, that is, financial institutions that may pose risks to the stability of the financial system and the broader economy in the event of their distress or failure.
source https://www.thesundaily.my/business/ram-top-3-banks-comfortably-able-in-meeting-d-sibs-requirements-HF1979009
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