Singapore plans to require major banks whose failure could threaten the financial system to hold loss-absorbing funds, reducing the risk of taxpayer-funded rescues, under the Financial Services and Markets (Amendment) Bill 2026. Local banks would need loss-absorbing resources equal to 14% of risk-weighted assets, and foreign banks in systemically important global groups 18%. Eligible instruments include regulatory capital and senior debt sold to external investors, which could be written down or converted into shares if a bank becomes nonviable. MAS proposes giving banks five years from notification to comply, mainly by issuing eligible debt, and lawyers advise issuing at a measured pace to avoid higher funding costs. The rules would fill a gap in the Financial Services and Markets Act 2022, which did not let the central bank require advance set-asides.
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