Singapore banks confident of meeting new capital rules

Singapore banks confident of meeting new capital rules
By Millet Enriquez | Posted: 28 June 2011 2301 hrs

SINGAPORE : Singapore banks are confident that they will be more than ready to meet the new requirements set out by the central bank by 2013.

This is because most of them already have strong capital positions post the Asian financial Crisis in 1997.

Thus, the new capital requirement will not pose much fundamental adjustments for the banks.

DBS, UOB and OCBC have all welcomed the move, which is expected to boost Singapore's position as a global financial hub.

The Monetary Authority of Singapore (MAS) announced on Tuesday tougher capital rules for Singapore banks, setting the revisions at a higher level than those rolled out for Basel III.

"Well, the truth is that most of the Singapore banks already have high levels of capital post the 97-98 crisis. Capital adequacy in Singapore has been very robust and the central bank has been very prudent in encouraging banks to be well-capitalised," said Piyush Gupta, DBS' CEO and incoming chairman of the Association of Banks in Singapore.

"Therefore, the new capital requirement would not require too much fundamental action on the part of the banks over the next two or three years. So I really don't see a profound shift in the market, either from a capital or a liquidity standpoint in the short-term," he added.

Mr Gupta was speaking at the sidelines of the annual dinner by the Association of Banks in Singapore.

OCBC said its capital levels under Basel III rules are already higher than MAS' revised requirements and ahead of the 2019 timeline.

In a statement, OCBC CEO David Conner said: "We expect to be able to meet MAS' revised CAR (Capital Adequacy Ratios) requirements comfortably without having to raise any additional equity, undertake any rights issue, cut any dividends, or change our strategic plans."

UOB said the changes provide clarity for local banks to implement the Basel III standards.

"The phased approach will help ensure a smooth transition. UOB has consistently placed emphasis on maintaining a strong capital position and we are confident of meeting the new requirements. The revisions are in line with ongoing efforts to strengthen the industry's resilience and to position Singapore as a global financial centre," said Wee Ee Cheong, deputy chairman and CEO of UOB in a statement.

- CNA /ls

- wong chee tat :)