On May 16, PER SBS added Basel recommendations into regulations.
PER SBS updated liquidity risk management, adding net stable funding ratio (NSFR).
Resolution 4221-2023 approved the new regulations for liquidity risk management.
Background
In Dec. 2010, Basel Committee on Banking Supervision (BCBS) published Basel III: International framework for liquidity risk measurement, standards, and monitoring.
BCBS introduced NSFR, to promote stability, limit dependence on short-term wholesale, and better assess funding risk for all on- and off-balance sheet exposures.
In Oct. 2014, after review, BCBS published Basel III: The net stable funding ratio and in Feb. 2017 Basel III – The net stable funding ratio: frequently asked questions.
In Dec. 2023, PER SBS took recommendations from BCBS and developed a prudential regulatory framework based on international practices, appropriate to local conditions.
To ensure sustainable funding structure for financial entities, reduce disruptions to usual funding sources that will erode liquidity position, and increase bankruptcy risk.
Highlights
The net stable funding ratio measures the relationship between stable funding available and stable funding required, which must always be greater than 100%.
The stable funding available is the company's equity and liabilities expected to be stable over one year, determined by maturity period, type of funding and counterparty.
The stable funding required is the company's off-balance sheet assets and exposures.
The compliance with regulatory limit of NSFR will be based on monthly closing balance.
