MAS consults on proposed amendments to regulatory framework for large exposures of Singapore-incorporated merchant banks and Singapore-incorporated banks

29 July 2025

On 15 July 2025, the Monetary Authority of Singapore (“MAS”) published its Consultation Paper on Proposed Amendments to Regulatory Framework for Large Exposures of Singapore-incorporated Merchant Banks and Singapore-incorporated Banks (“Consultation Paper”). The consultation closes on 26 August 2025. 

In the Consultation Paper, MAS observes that concentrated exposures to a single counterparty or group of connected counterparties can pose a significant risk to banking institutions, as a banking institution’s overall financial health becomes closely tied to the idiosyncratic risks of that counterparty. Concentration risk can arise from both on- and off-balance sheet exposures, and is relevant across many different business models. Existing requirements to manage concentration risks are set out under MAS Notice 1012 on Credit Facilities to a Counterparty or Group of Counterparties for Singapore-incorporated merchant banks (“Merchant Banks”) (“Notice 1012”) and MAS Notice 656 on Exposures to Single Counterparty Groups for Banks Incorporated in Singapore (“Notice 656”).

MAS proposes an updated regulatory framework, which is intended to replace the existing framework under Notice 1012, for measuring and controlling large exposures of Merchant Banks. The proposed regulatory framework sets out a limit for exposures to any counterparty or group of counterparties (“large exposures limit”) and is aimed at ensuring concentration risk in Merchant Banks is adequately measured and controlled.

MAS also proposes amendments to MAS 656 to refine the scope of exposures to related corporations that are holding companies, banks, and merchant banks which are currently excluded from the large exposures limit, to more adequately address contagion risk arising from exposures to related counterparties which are not subject to minimum prudential standards, while taking into consideration the operating structures of Singapore-incorporated banks. 

Reference materials 

The Consultation Paper is available on the MAS website www.mas.gov.sg.