Bank Negara Malaysia (the Bank) today issued the policy document on Domestic Systemically Important Banks (D-SIB) Framework, which sets out the Bank’s assessment methodology to identify D-SIBs in Malaysia, and the inaugural list of D-SIBs.

D-SIBs refer to banks whose distress or failure have the potential to cause considerable disruption to the domestic financial system and the wider economy. Higher capital requirements introduced for such banks will complement the regulatory framework in place to mitigate the risks posed by D-SIBs to the stability of the Malaysian financial system and the wider economy.

The Bank’s D-SIB framework has been informed by the Basel Committee on Banking Supervision’s (BCBS) framework for dealing with D-SIBs and the structural characteristics of the Malaysian banking system. A D-SIB is required to maintain higher capital buffers to meet regulatory capital requirements that include a Higher Loss Absorbency (HLA) requirement. This serves to increase a D-SIB’s capacity to absorb losses thereby reducing its probability of distress or failure during periods of stress. In turn, this will contribute to a safer and more resilient Malaysian financial system.

The banking groups identified as D-SIBs based on 2018 data and the assessment methodology set out in the policy document are as follows: 

In accordance with the framework, the applicable HLA requirement for these D-SIBs ranges between 0.5% to 1.0% of risk-weighted assets, at the consolidated level. The HLA requirement for these D-SIBs will come into effect on 31 January 2021.

Going forward, the list of D-SIBs will be updated annually and published together with the release of the Bank’s Financial Stability Review in the second half of each year.

Further details on the framework can be found in the following documents:

• Domestic Systemically Important Banks Framework policy document
• Frequently asked questions
• Response to feedback received