Banks have been working like never before, combating unprecedented situations, fast-changing technologies and consumer behaviour, more complex regulations, and greater external threats. In this new world rife with uncertainties, they need to adapt their business models to take maximum advantage of the new regulatory reforms, use them to change the way they do business, and achieve competitive advantage.
In this series, we highlight the key aspects of the current regulatory environment in Southeast Asia (SEA) affecting the banking industry and share our perspectives, outlook, and recommendations across the three most relevant aspects for banks today.
Latest issues
Key aspects affecting the SEA banking industry
Regulations
Despite the disruptions caused by the COVID-19 pandemic, we foresee banks facing more regulatory scrutiny in the upcoming year. The US Federal Reserve and the European Central Bank have already started to intensify their scrutiny, taking measures such as issuing consent orders and conducting drills. Banks will have to focus on preparations to meet these inevitable timelines in 2021.
Basel Committee on Banking Supervision’s (BCBS) standard 239
Regulators across SEA are likely to conduct more in-depth reviews and take stricter actions against non-compliance of Basel Committee on Banking Supervision’s standard 239 (BCBS 239).
Basel III finalisation
In SEA, adoption of the finalised Basel III framework has been splintered. Nevertheless, the changes to these standards are likely to have significant impact on banks across the region, particularly in areas of credit risk, operational risk, the output floor and the leverage ratio.
LIBOR transition
With LIBOR cessation looming, regulators globally have set key milestones for market participants to adhere to. Meanwhile, industry bodies continue to develop market conventions to facilitate transition. For banks, challenges remain in areas such as conduct risk and contract remediation.
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