To mitigate risks to the overall banking system.
Under this framework, the three biggest banks in Malaysia by asset size would need to maintain higher capital buffers to meet regulatory capital requirements that include a higher loss absorbency requirement.
It said Maybank, CIMB and Public Bank were idenified as D-SIBs based on 2018 data and the assessment methodology set out in the policy document. “D-SIBs are identified based on an indicator-based measurement approach . The IBA uses indicators across three categories – size, interconnectedness and substitutability to determine the degree of a banking institution’s systemic importance, ” the central bank said.
“The central bank expects the designated D-SIBs to be able to meet the additional capital buffer requirement, which comes into effect on Jan 31,2021, without having to raise additional capital and with minimal impact to their business activities, ” it said. It noted that “too-big-to-fail” issue with banks existed not only at the global level but also national level in Malaysia.
Bank Negara said that in the aftermath of the crisis, a comprehensive set of policies were devised by global standard setting bodies to address the “too-big-to-fail” problem, one of which is to develop a framework to identify systemically important banks and to increase resilience of SIBs to distress events.
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