HBL, UBL and NBP declared ‘systemically’ crucial for Pakistan
SBP enhances supervisory and regulatory requirements for banking institutions
Besides these local banks, the branches of Global-Systemically Important Banks (G-SIBs) operating in Pakistan will hold additional CET1 capital against their risk-weighted assets in Pakistan at the rate as applicable on the respective G-SIB. PHOTO: EXPRESS
KARACHI:
The State Bank of Pakistan (SBP) has identified Habib Bank Ltd (HBL), National Bank of Pakistan (NBP), and United Bank Ltd (UBL) as the country’s three big and important banks, urging the institutions to enhance “supervisory and regulatory requirements” to avoid failing to perform their obligations.
Their failure, added the SBP, may disrupt the whole financial system and impact the economy at large.
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“On the basis of the designation criteria, the SBP has designated HBL, NBP and UBL as D-SIBs (Domestic Systemically Important Banks),” the central bank said in a statement on Thursday.
The three banks will be required to follow enhanced supervisory and regulatory requirements, including the Higher Loss Absorbency Capital surcharge in the form of additional core equity tier-1 capital (CET1). “The HBL will maintain CET1 of 2% while NBP and UBL will maintain additional CET1 of 1.5%,” the central bank said.
“The bank(s) designated as D-SIB(s) will be required to meet enhanced supervisory and regulatory requirements by end of March 2019,” the central bank said. These enhanced requirements aim to further strengthen the resilience of big banks towards shocks and augment their risk management capacities, the central bank.
Besides these local banks, the branches of Global-Systemically Important Banks (G-SIBs) operating in Pakistan will hold additional CET1 capital against their risk-weighted assets in Pakistan at the rate as applicable on the respective G-SIB.
“The need for enhanced supervisory focus on ‘Systemically Important Financial Institutions’ SIFIs) gained attention in the wake of Global Financial Crisis of 2007-08,” reads the SBP framework for D-SIBs announced in April 2018.
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In November 2011, Basel Committee on Banking Supervision (BCBS) issued a ‘Global Systemically Important Financial Institutions (G-SIFIs) framework’ for enhancing the resilience of large financial institutions, active internationally.
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Later, in October 2012, the framework was extended to Domestic Systemically Important Banks (D-SIBs) with the realization that “some banks might not be big enough to cause disruptions in the global economy but owing to their significant size and nature of business for domestic economy, their failure may jeopardize the overall financial stability of a country,” it added.
Published in The Express Tribune, June 15th, 2018.
The State Bank of Pakistan (SBP) has identified Habib Bank Ltd (HBL), National Bank of Pakistan (NBP), and United Bank Ltd (UBL) as the country’s three big and important banks, urging the institutions to enhance “supervisory and regulatory requirements” to avoid failing to perform their obligations.
Their failure, added the SBP, may disrupt the whole financial system and impact the economy at large.
Microfinance banks crucial for economic growth
“On the basis of the designation criteria, the SBP has designated HBL, NBP and UBL as D-SIBs (Domestic Systemically Important Banks),” the central bank said in a statement on Thursday.
The three banks will be required to follow enhanced supervisory and regulatory requirements, including the Higher Loss Absorbency Capital surcharge in the form of additional core equity tier-1 capital (CET1). “The HBL will maintain CET1 of 2% while NBP and UBL will maintain additional CET1 of 1.5%,” the central bank said.
“The bank(s) designated as D-SIB(s) will be required to meet enhanced supervisory and regulatory requirements by end of March 2019,” the central bank said. These enhanced requirements aim to further strengthen the resilience of big banks towards shocks and augment their risk management capacities, the central bank.
Besides these local banks, the branches of Global-Systemically Important Banks (G-SIBs) operating in Pakistan will hold additional CET1 capital against their risk-weighted assets in Pakistan at the rate as applicable on the respective G-SIB.
“The need for enhanced supervisory focus on ‘Systemically Important Financial Institutions’ SIFIs) gained attention in the wake of Global Financial Crisis of 2007-08,” reads the SBP framework for D-SIBs announced in April 2018.
Pakistan govt’s debt swells to Rs23.6tr to bridge budget gap
In November 2011, Basel Committee on Banking Supervision (BCBS) issued a ‘Global Systemically Important Financial Institutions (G-SIFIs) framework’ for enhancing the resilience of large financial institutions, active internationally.
Bank of China to establish yuan settlement system
Later, in October 2012, the framework was extended to Domestic Systemically Important Banks (D-SIBs) with the realization that “some banks might not be big enough to cause disruptions in the global economy but owing to their significant size and nature of business for domestic economy, their failure may jeopardize the overall financial stability of a country,” it added.
Published in The Express Tribune, June 15th, 2018.