SINGAPORE DELAYS BANK CAPITAL RULES
But regulator says remains committed to full implementation of Basel III reforms
HONG KONG
SINGAPORE’S banking regulator has told lenders it will delay by a year the implementation of global rules designed to rein in trading risks — the latest sign that the post-crisis overhaul of the world’s banking system may be stalling.
The move follows similar postponements by banking regulators in Hong Kong and Australia as concerns grow over the complexity of the rules and as it is also uncertain how they will fit with other capital reforms yet to be finalised.
The Monetary Authority of Singapore (MAS) notified local banks of the delay to the socalled “fundamental review of the trading book” (FRTB) in a letter last month that also flagged a number of other regulatory issues, said two people briefed on the matter.
The rules were finalised last year by the Basel Committee on Banking Supervision as part of a decade-long international effort to prevent a repeat of the 2008-2009 global financial crisis.
The FRTB rules, which require banks to hold more capital against their trading books, were scheduled to become effective in January 2019.
A MAS spokesman said the regulator remained committed to a full implementation of Basel III reforms, but was not rigidly adhering to a timeline.
Basel has no powers of enforcement and relies on member countries to commit to the implementation of reforms agreed by the committee.
A person familiar with the committee’s workings said there was no sign of the FRTB being ditched outright. In addition, capital for trading books is a small proportion of a bank’s total buffer and, therefore, a delay in the FRTB does not materially affect the bigger capital picture for the banking sector, said this person.
Group of 20 (G20) countries meet in Germany this week to take stock of the implementation of global banking reforms.
Mark Carney, chairman of the Financial Stability Board, which coordinates financial rules for the G20, warned on Monday that global growth would suffer if regulators give in to “reform fatigue” and fail to complete the agreed changes.
But after an intensive decade of rule-making, some policymakers now want to prioritise growth over yet more complex banking regulation.
Regulators in Asia were worried their banks might be at a disadvantage if they pushed ahead with the rules while other countries held back, said the sources. Reuters