MAS consults on proposed framework for ex-post resolution levies for banking sector

29 July 2025

On 30 June 2025, the Monetary Authority of Singapore (“MAS”) published its Consultation Paper on Proposed Framework for Ex-post Resolution Levies for Banks, Merchant Banks and Finance Companies (“Consultation Paper”). The consultation closes on 31 July 2025.

The Consultation Paper seeks feedback on a proposed framework to impose ex-post levies on the banking sector, comprising banks, merchant banks, and finance companies (“Banks”), to recover the cost of resolving a distressed Bank (“ex-post levies framework”) under the Financial Services Market Act 2022 (“FSMA”), following enhancements made to the resolution regime for financial institutions in Singapore in 2016. The cost of resolving such a Bank will initially be covered by a resolution fund, set up under the FSMA to fund the costs of any resolution measures taken by MAS and administered by an independent trustee. MAS intends to consult on ex-post levies frameworks for other sectors in the future.

MAS previously consulted on the proposal to apply ex-post levies on the rest of the banking sector, i.e. all other banks, merchant banks, and finance companies, other than the Bank in resolution. MAS reports that most respondents concurred with the proposal.

MAS is now consulting on the following for the ex-post levies framework:

  • Levies based on proportion of uninsured deposit balances: MAS seeks comments on its proposal to use the average uninsured deposit balances to compute levies, and for the resolution levies of Banks within the banking sector to be proportionate to their share in the Singapore market.
  • Levy computation and collection timelines: MAS proposes to begin levy collection approximately two years after the resolution fund obtains funding to carry out its mandate of funding resolution measures taken in respect of a distressed Bank, with MAS having the flexibility to determine the collection commencement date. In addition, MAS proposes to collect levies over a period of five to ten years.
  • Treatment for exiting Banks and new entrants: MAS proposes to (i) require Banks that cease operations after the imposition of levies to make lump sum payments; and (ii) compute and impose a lump sum levy on Banks that voluntarily exit the Singapore market before the two-year mark for levy computation. For new Banks that are set up after the resolution event, no levies will be imposed as the resolution measures were taken before their entry into the Singapore market.
  • Levy computation when Deposit Insurance Fund contributes to resolution fund: Under section 29A of the Deposit Insurance and Policy Owners’ Protection Schemes Act 2011, the Deposit Insurance Fund (“DI Fund”) may be used to contribute to the resolution fund to support a resolution measure undertaken for a Deposit Insurance Scheme Member (“DI SM”) and other matters relating to the measure, subject to the equivalent cost criterion. MAS seeks comments on the proposal that if the DI Fund is used to contribute to the resolution fund and the equivalent cost criterion is met, the DI Fund should be used to offset the resolution levies for DI SMs as a collective group by the amount in the DI Fund (i.e. resolution levy discount).

The proposed framework will be effected through regulations.

Reference materials

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