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S'pore banks well-positioned to meet new liquidity rules: Fitch

Singapore's three local banking groups are well-positioned to meet the Monetary Authority of Singapore's (MAS) new liquidity coverage ratio (LCR) requirements, Fitch Ratings said.

SINGAPORE: Singapore's three local banking groups are well-positioned to meet the Monetary Authority of Singapore's (MAS) new liquidity coverage ratio (LCR) requirements, Fitch Ratings said on Monday (June 30).

The ratings agency said DBS Group, Oversea-Chinese Banking Corp (OCBC) and United Overseas Bank (UOB) all enjoy strong domestic deposit franchises, with Singapore dollar loan-to-deposit ratios of 75 to 85 per cent.

This funding strength should also help the three local banks meet the liquidity requirement for loans made in all currencies, Fitch said.

MAS announced last week, new liquidity requirements for banks operating in Singapore in line with the Basel III guidelines that will eventually apply to banks around the world.

Under the new MAS requirement, Singapore's three banks will have to maintain 100 per cent local-currency LCR from January 2015.

An all-currency LCR will also be implemented - starting at 60 per cent in 2015 and rising in annual 10-percentage-point steps to 100 per cent by 2019.

Foreign banks that are deemed systemically important to Singapore's domestic banking system will also fall under the new framework, with LCR requirements of 100 per cent and 50 per cent for Singapore dollar and foreign-currency liabilities, respectively, beginning in January 2016.

Fitch said the tougher liquidity requirements for such foreign banks could spur them to compete more aggressively for deposits.  

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