Bank Negara maintains additional capital buffers for Maybank, CIMB and Public Bank

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Bank Negara maintains capital buffers

Highlights

Bank Negara Malaysia maintains additional HLA capital buffers for Maybank at 1% of risk-weighted assets, and for CIMB and Public Bank at 0.5% each.
These additional capital requirements aim to strengthen the ability of major systemic banks to absorb losses and reduce contagion risks to Malaysia's financial system.
This supervisory approach continues in line with BNM's 2020 policy document amid growing interconnectedness in the financial system and the regional expansion of banking groups.

This article was translated from the original. Read the original version by our correspondent here.

Annual assessment and capital requirements

As reported by The Edge Malaysia, citing a Bank Negara Malaysia statement published on its website, the central bank maintained higher loss absorbency, or HLA, requirements for Malayan Banking Bhd, CIMB Group Holdings Bhd and Public Bank Bhd under the domestic systemically important banks, or D-SIB, framework.

The requirements are imposed as additional capital buffers on banks whose financial distress or failure could significantly disrupt the domestic financial system and the broader economy. In the latest assessment, Maybank remains subject to an HLA of 1% of risk-weighted assets, while CIMB and Public Bank remain at 0.5% each.

Implications for financial system stability

Maintaining these additional capital buffers reflects BNM's continued regulatory stance towards banking institutions with greater systemic importance in the Malaysian market. The approach aims to ensure major banks have an additional layer of capital to absorb losses during periods of stress, thereby reducing contagion risks to the financial sector and domestic economy.

In its 2020 policy document, BNM stated that increasing interconnectedness in the financial system and the regional expansion of financial groups reinforce the need to tighten oversight of systemically important institutions. Under the D-SIB framework, the central bank can also impose additional capital requirements, enhance supervision and implement closer monitoring to safeguard financial stability.

In our previous coverage of Malaysia's need to strengthen its fiscal buffers, we highlighted that narrowing fiscal space and volatile global financing costs make preparation for recurring shocks increasingly critical. The article also outlined proposed measures such as broadening the tax base, improving targeted subsidies and maintaining debt management discipline to ensure the government has the capacity to absorb pressure when crises occur.

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