The revised liquidity coverage ratio (LCR) rules announced on May 28 by the Monetary Authority of Singapore (MAS) will take effect on Sept 1. The framework narrows high-quality liquid asset (HQLA) eligibility by disqualifying securities issued by financial institutions and related corporations. MAS’s grandfathering provision insulates holdings acquired before May 28, preserving their regulatory eligibility until Aug 31, 2031 or the date they are sold whichever is earlier,
Banks’ HQLA pools are also largely dominated by Level 1 assets, which account for more than 70% of holdings and include cash, central-bank balances and highly rated sovereign bonds, Bloomberg Intelligence says, and the regulatory impact should be minor.
Bloomberg Intelligence also points out that Singapore banks' strong risk profiles, ample capital and favorable technicals should help keep their bonds better-placed than regional peers in 2H2026, despite economic and geopolitical uncertainties. “Asset quality remains sound, backed by strong underwriting, tight risk management and solid provisioning. Liquidity should stay robust despite revised regulatory requirements. At the same time, proposed rules on total loss-absorbing capacity (TLAC) could shift attention toward more active capital management and balance-sheet optimisation,” the Bl update says.
The banks' LCR averaged 145% in FY2025.
