SINGAPORE, June 24 Singapore is to bring in new
rules to ensure all banks operating in the city-state have
enough liquid assets to withstand a sudden shock to the
financial system, falling in line with the global regulatory
trend for tougher liquidity rules.
DBS, Oversea-Chinese Banking Group and
United Overseas Bank, and foreign banks with a major
local presence will have to meet a requirement proposed by the
Basel Committee on Banking known as the liquidity coverage ratio
(LCR) by 2015, Lim Hng Kiang, Singapore's trade and industry
minister, said in a speech on Tuesday.
Regulators proposed the LCR in the wake of the 2008
financial crisis to ensure banks have a big enough buffer of top
quality assets like cash and government bonds so they can
withstand 30 days of outflows at a time when it is tough to get
funding on the whole sale markets
Under the rules formulated by Singapore, the three local
banks will have to meet the full LCR requirement for
Singapore-dollar assets by January 2015 and an all-currency LCR
of 60 percent. Foreign banks will have to meet a Singapore
dollar LCR of 100 percent and an all-currency LCR of 50 percent.
"The crisis experience shows how the buildup of risks can
severely destabilise even the most developed and sophisticated
financial markets," Lim, who is also the deputy chairman of the
Monetary Authority of Singapore, told a banking event.
Lim also said the central bank will come up with a new
framework of rules for local and foreign banks with a large
retail presence in Singapore, to ensure the domestic banking
system is protected in the event they run into difficulties.
(Reporting by Saeed Azhar, Anshuman Daga and Rachel Armstrong;
editing by Louise Heavens)