Singapore finalises statutory bail-in regime for banks

Singapore introduced enhancements to the resolution regime for financial institutions last year. Enhanced resolution powers have been given to the Monetary Authority of Singapore (“MAS”) to intervene and manage a within-scope financial institution at the point of non-viability, to facilitate the orderly resolution of such financial institution. This is so that financial stability and the continuity of critical functions performed by financial institutions and financial market infrastructures can be maintained in the interim. The MAS Amendment Act establishes the legislative framework for recovery and resolution planning of financial institutions, including on statutory bail-in powers, temporary stays on termination rights, cross-border recognition of resolution actions, creditor safeguards and resolution funding. This legislative framework has been coming into force gradually over the past year, with majority of the provisions on the resolution framework now in operation. The latest developments include the implementation of the statutory bail-in regime for banks and MAS’ power to temporarily stay termination rights for within-scope financial institutions from 29 October 2018.

 

In this alert, we will provide an overview of the application and timing of the statutory bail-in regime for banks, together with a summary of the rules on temporary stays on termination rights. We will also look at the practical implications of the new rules on debt capital market participants.