singapore banks safest in asia

amidst the current market turmoil which has decimated the wealth of many investors, isn't it really reassuring to know that singapore banks have been voted asia's safest in an annual league table compiled by new york-based global finance magazine.

in terms of local banks, occupying the top spot is dbs bank, ranked 19th in the top 50 listing, followed by ocbc bank taking the 25th spot and uob bank, the next place at 26th.

in a seperate ranking, dbs, ocbc bank and uob bank took 1st, 2nd and 3rd place respectively in global finance's list of safest banks in asia.

the ranking was based on evaluations of long-term credit ratings and total assets of the 500 largest banks worldwide.

my comments:

the monetary authority of singapore has announced on june 28, 2011 that singapore incorporated banks must meet new capital requirements which will be tougher than that of basel III rules.

MAS will require Singapore-incorporated banks to meet a minimum Common Equity Tier 1 (“CET1”) capital adequacy ratio (“CAR”) of 6.5%, Tier 1 CAR of 8% and Total CAR of 10% from 1 January 2015. These standards are higher than the Basel III minimum requirements of 4.5%, 6% and 8% for CET1 CAR, Tier 1 CAR and Total CAR, respectively.

In addition, MAS will require Singapore-incorporated banks to meet the Basel III minimum capital adequacy requirements from 1 January 2013, two years ahead of the Basel Committee on Banking Supervision’s 2015 timeline. This means that from 1 January 2013, Singapore-incorporated banks will meet a minimum CET1 CAR of 4.5% and Tier 1 CAR of 6%. MAS’ existing requirement for Total CAR will remain unchanged at 10%.

In line with Basel III requirements, MAS will introduce a capital conservation buffer of 2.5% above the minimum capital adequacy requirement. This will be met fully with CET1 capital and phased in on 1 January each year, from 2016 to 2019. Including the capital conservation buffer, Singapore-incorporated banks will be required to meet a CET1 CAR of 9%, which is higher than the Basel III requirement of 7%.

notes:

1 Basel III sets out the global standards on bank capital adequacy established by the Basel Committee on Banking Supervision.

2 The requirements will apply to every bank incorporated in Singapore with a Full Bank licence, and its locally-incorporated bank subsidiaries. The requirements will apply at both bank-group and bank-solo levels.

source: http://wsww.mas.gov.sg/news_room/press_releases/2011/MAS_Strengthens_Capital_Requirements_for_Singapore_incorporated_Bank.html

my comments:

although the new requirements are to be phased in from jan 01, 2013 to jan 01, 2019, our local banks are confident of meeting them. for example, dbs bank had a total capital adequacy ratio (CAR) of 17.2%, tier 1 ratio of 14.2% and core tier 1 ratio of 11.5% as at end march 2011.

and with the di-ppf bill passed and effective may 01, 2011, i have full faith in our financial institutions and insurers and should go a long way to assure consumers' trust in them.