Shawn Loh on Financial Services and Markets (Amendment) Bill
Allowing the Monetary Authority of Singapore (MAS) to impose Total Loss-Absorbing Capacity (TLAC) requirements on systemically important financial institutions amounts to a bail-in from private owners of debt and equity, not a bailout from the public tax dollar, said MP Shawn Loh. While welcoming the move, he asked MAS to monitor whether TLAC ends up adding to banks’ funding costs, resulting in higher lending rates to local firms. He also asked how a restriction on retail sales will work in practice, calling for extra care to be taken with individual investors, especially seniors, so they understand that loss-absorbing instruments pay a higher rate of return because they can be written down at the worst possible time. Mr Loh spoke in parliament on Tuesday (Oct 6).
Allowing the Monetary Authority of Singapore (MAS) to impose Total Loss-Absorbing Capacity (TLAC) requirements on systemically important financial institutions amounts to a bail-in from private owners of debt and equity, not a bailout from the public tax dollar, said MP Shawn Loh. While welcoming the move, he asked MAS to monitor whether TLAC ends up adding to banks’ funding costs, resulting in higher lending rates to local firms. He also asked how a restriction on retail sales will work in practice, calling for extra care to be taken with individual investors, especially seniors, so they understand that loss-absorbing instruments pay a higher rate of return because they can be written down at the worst possible time. Mr Loh spoke in parliament on Tuesday (Oct 6).
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