Our capital position remained healthy. As at 31 December
2016, the Group’s Common Equity Tier 1 and Total Capital Adequacy Ratios (CAR)
remained strong at 13.0 per cent and 16.2 per cent respectively. On a
fully-loaded basis, the Common Equity Tier 1 CAR stood at 12.1 per cent. The
Group’s leverage ratio was 7.4 per cent, well above Basel’s minimum requirement
of 3 per cent.
Basel III creates a global standard of minimum liquidity
that are need to be held by bank.
In Basel III bank is required to hold more liquid capital.
There are two minimum
ratio liquidity rules in Basel III.
coverage ratio used to lessen the liquidity risk mismatch in the short-term, it
is designed to ensure bank maintain an adequate level of high quality
unencumbered liquid assets than can be converted into cash to meet the
liquidity needs and to survive a 30 day when market in crisis.
Stable Funding Ratio is targeted to bank maturity transformation which is
transforming short term borrowing into long term lending this lead bank to liquidity risk, to limit
this risk NSFR can be defined as ratio of
available amount of stable funding relative to required amount of stable
funding that is hoped to be reliable during the one year of stressed time, the
ratio for NSFR at least should be equal to 100% (BIS, 2014) or can be said
banks need to have enough stable funding for 12 month ahead to cover its need
for stable funding 12 months ahead.
Global financial crisis can be
cause by excessive leverage on and off balance sheet in banking system so Basel
III introduced a non-risk based leverage ratio to measure risk based capital
requirement (BIS, 2014). The leverage ratio requirement according to Basel III,
tier 1 capital minimum have to have at least 3% asset with no risk weighted
Money Authority of Singapore
(MAS) announced that bank in Singapore will meet capital adequacy with minimum
CAR of 6.5%, Tier 1 CAR 8% and total CAR of 10%
higher than the global standard of Basel III which are CAR of 4.5%, Tier
1 6% and total Car 8% (MAS, 2011).