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MAS lowers capital adequacy ratio

MAS lowers capital adequacy ratio

(9 February 2007 – Singapore) The Monetary Authority of Singapore has announced it will lower the amount of capital commercial banks are required to hold in the light of improved risk management practices. MAS said the tier 1 capital adequacy ratio would be lowered to six percent from the current figure of seven percent of risk-weighted assets from the start of March. It is the first time MAS has lowered the ratio since May 2004.

MAS said the progressive refinements reflected its ongoing efforts to maintain prudent requirements that were commensurate with banks' risk profiles and enhanced risk management capabilities.

The central bank said banks would have more flexibility as a result of the move to manage their capital more efficiently.

MAS said the total capital adequacy ratio would remain unchanged at 10 percent.

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