29 August 2019
On 14 August 2019, the Monetary Authority of Singapore (“MAS”) released MAS Notice 656 on “Exposures to Single Counterparty Groups for Banks Incorporated in Singapore” (“Notice”).
To take effect on 1 October 2020, the Notice applies to all locally-incorporated banks (“Reporting Bank”) and sets out:
- limits on exposures of a Reporting Bank to a single counterparty group
- types of exposures to be included in or excluded from those limits
- basis for computation of exposures
- eligible credit risk mitigation techniques
- approach for aggregation of exposures
The Notice provides that a Reporting Bank must not permit, at the Solo level, the aggregate of its exposures to any single counterparty group to exceed 25% of its Tier 1 capital.
The term “single counterparty group” is defined to mean a counterparty to the Reporting Bank or a banking group entity, a director group, a major stake entity group, a substantial shareholder group, or a connected counterparty group.
A Reporting Bank:
- is required to aggregate the exposures of the Reporting Bank and its banking group entities to the same counterparty, director group, substantial shareholder group or connected counterparty group, and
- must not permit, at the Group level, the aggregate of the exposures of the banking group to any counterparty, any director group, any substantial shareholder group or any connected counterparty group to exceed 25% of the Tier 1 capital of the banking group.
The following materials are available from the MAS website www.mas.gov.sg:
- MAS Notice 656 Exposures to Single Counterparty Groups for Banks Incorporated in Singapore
- MAS Notice 656 Reporting Template
Allen & Gledhill Regulatory & Compliance
To assist our clients with compliance matters, our consultancy arm, Allen & Gledhill Regulatory & Compliance, provides a range of services and solutions. Should you have any queries relating to compliance issues arising out of this development, please contact: