Singapore Passes Bill Giving MAS Powers to Set Loss Absorption Rules for D-SIBs

The new legislation aims to strengthen the financial resilience of Singapore's banking system by ensuring D-SIBs have sufficient resources to absorb losses in times of distress. This complements MAS's existing powers to "bail in" subordinated creditors. The framework is designed to help rebuild bank capital and support orderly resolution. MAS noted that Singapore’s D-SIBs remain well-capitalised and well-managed, describing the framework as part of ongoing efforts to prepare for the unlikely event of a distressed bank.

MAS has already engaged with the industry and the public on the specifics of the TLAC framework, including the required levels, eligible instruments, and disclosure standards. The amendments empower MAS to set these requirements and mandate public disclosure of TLAC composition and the priority of loss-absorbing instruments. Non-compliance could lead to fines of up to S$250,000 upon conviction, with additional fines for continuing offenses.

Beyond loss absorption, the bill also incorporates technical amendments to Singapore’s counter-proliferation financing framework. These changes align the country’s standards with updated Financial Action Task Force guidelines, explicitly clarifying MAS's supervisory role in proliferation financing alongside money laundering and terrorism financing. This also enables MAS to assist domestic and foreign authorities in supervising these risks.

The amendments will take effect on a date appointed by the minister through a gazette notification. While MAS emphasizes that the framework is a preventative measure, the proactive legislative action reflects an ongoing effort to enhance financial stability and regulatory alignment within Singapore's financial sector.