Singapore MAS to strengthen regulation in wake of US sub-prime crisis
By Nicholas Fang
THE Monetary Authority of Singapore (MAS) will tighten supervisory rules to ensure that financial institutions are well-placed to weather events such as the ongoing sub- prime crisis in the United States.
Its deputy managing director for prudential supervision, Ms Teo Swee Lian, said the events triggered by the sub-prime crisis had exposed a number of weaknesses in Singapore.
She said at the opening of the Second Annual Risk Management Conference yesterday that the crisis had spurred the MAS to re-examine its role as the financial industry’s supervisor.
‘It is inevitable that there will have to be some adjustments to our rules to address weaknesses that have been identified, for example, in relation to stress-testing processes,’ she said.
‘MAS will do this in a proportionate manner to ensure that there are no unintended consequences.’
She said MAS rules are not meant to be a comprehensive textbook for the management of risk, and urged board members and senior management to be responsible in ensuring that an institution’s risk management framework is robust.
Ms Teo also said that the MAS will continue to engage financial institutions on their risk management practices and said the central bank would increase its level of supervision.
‘During this phase, where the industry as a whole is seeking to internalise the lessons learnt from the crisis, institutions can expect more in-depth supervisory challenges by MAS on the appropriateness of their risk-management frameworks, especially in areas relating to stress testing and contingency planning.’
Banks in Singapore backed the MAS’ approach.
Standard Chartered Singapore chief executive Lim Cheng Teck said: ‘We welcome stronger and tighter regulatory supervision as it is in the interest of consumers.
‘Banking remains a risk-based industry and it is important that we remain prudent in our management and pricing of risk.’
OCBC Bank group chief risk officer Gilbert Kohnke agreed: ‘An effective risk-management programme is a prerequisite for any financially sound institution.
‘The board of directors and senior management each play critical roles in managing the risk environment, and thereby create, protect and enhance shareholder value.’
Source : Straits Times - 01 July 2008
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