26 February 2019
On 30 January 2019, the Monetary Authority of Singapore (“MAS”) issued MAS Notice 654 on Recovery and Resolution Planning (“MAS Notice 654”) as well as the Guidelines to MAS Notice 654 on Recovery and Resolution Planning (“Guidelines”).
MAS Notice 654, which takes effect on 30 January 2019, applies to a bank to which a direction for a recovery plan and its implementation has been issued under section 43(1) of the Monetary Authority of Singapore Act. MAS Notice 654 sets out the requirements that a notified bank has to comply with in its recovery and resolution planning.
Recovery and resolution planning aims to reduce the risks posed by a bank to the stability of the financial system, ensure the continuity of functions that are critical to the economy, and enable a distressed bank to restore its financial strength, be restructured or exit from the market in an orderly manner.
Among other things, MAS Notice 654 provides that for the purposes of recovery planning, the notified bank shall prepare a recovery plan which includes:
- a framework of recovery triggers that identifies the points at which appropriate recovery options may be taken;
- an escalation process upon the occurrence of a trigger event, to facilitate prompt assessment of the impact and decision on the appropriate course of action;
- a menu of recovery options which are available in situations of severe stress to address capital shortfalls and liquidity pressures; and
- a communication plan to ensure timely communication with internal and external stakeholders.
For the purposes of resolution planning, the notified bank shall:
- maintain data and information for the purposes of resolution planning, resolvability assessment and the conduct of resolution;
- submit data and information for the purposes of resolution planning, resolvability assessment and the conduct of resolution, upon request by MAS; and
- inform MAS in the event of any material change to the bank’s business or structure, so as to facilitate resolution planning.
The Guidelines provide further guidance and elaboration on the requirements in MAS Notice 654.
The following materials are available on the MAS website www.mas.gov.sg:
- MAS Notice 654 Recovery and Resolution Planning
- Guidelines to MAS Notice 654 on Recovery and Resolution Planning