ISLAMABAD: The State Bank of Pakistan (SBP) on Thursday announced thedesignation of Domestic Systemically Important Banks (D-SIBs) for the year2019 under the Framework for Domestic Systemically Important Banks (D-SIBs)that was introduced in April 2018.
The framework introduced by State Bank is consistent with the internationalstandards and practices and takes into account the local dynamics, said aSBP press statement received here.
It specifies the methodology for the identification and designation ofD-SIBs, enhanced regulatory and supervisory requirements, andimplementation guidelines, the statement said adding that these enhancedrequirements aim to further strengthen the resilience of the SystemicallyImportant banks against shocks and augment their risk management capacities.
The identification of D-SIBs involves two-step process as in the firststep, sample banks are identified each year based on the quantitative andqualitative criteria while in the second step, D-SIBs are designated fromamong the sample banks on the basis of institutions’ systemic score interms of their size, interconnectedness, substitutability, and complexity.
In line with D-SIBs framework, State Bank has carried out the annualassessment on the basis of financials of end December 2018.
As per this assessment, three banks viz. Habib Bank Ltd., National Bank ofPakistan, and United Bank Ltd. have been designated as D-SIBs for the year2019.
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These banks will be subject to enhanced supervisory requirements and highercapital surcharge in the form of additional common equity tier-1 capital(CET-1) with effect from March 31, 2020.
The additional CET-1 requirement for National Bank of Pakistan and Habibbank would be 2 percent and for United Bank it would be 1 percent.
Besides, branches of Global-Systemically Important Banks (G-SIBs) operatingin Pakistan will hold additional CET1 capital against their risk-weightedassets in Pakistan at the rate as applicable on the respective principalG-SIB.
