Singapore has proposed legislation to help major financial institutions absorb losses without destabilising the wider financial system.
The Financial Services and Markets (Amendment) Bill 2026 was introduced for its first reading in Parliament on 8 September.
It would allow the Monetary Authority of Singapore (MAS) to require systemically important financial institutions to maintain a minimum level of total loss-absorbing capacity, known as TLAC.
TLAC acts as a financial buffer. It includes ordinary shares, eligible debt and other resources that can absorb losses and help recapitalise an institution in serious financial trouble.
The requirement would complement MAS’ existing power to write down or convert certain subordinated and senior unsecured debt to strengthen a distressed institution’s finances. This process is known as a bail-in.
MAS Could Set Different Requirements
Under the bill, MAS could decide how much loss-absorbing capacity an institution must maintain and how it should be calculated.
The regulator could also determine which financial instruments qualify and require affected institutions to disclose the level and composition of their TLAC.
Institutions may also have to disclose the order in which these instruments would rank if they were wound up.
MAS could apply different requirements to different classes of financial institutions and adjust them for individual firms where appropriate.
An institution that fails to comply could face a fine of up to S$250,000 upon conviction.
A continuing offence could attract a further fine of up to S$25,000 for each day it continues after conviction.
MAS consulted the public on the proposed TLAC changes between May and June 2026 and incorporated feedback where appropriate.
Financial Crime Laws to Be Updated
The bill also updates Singapore’s financial laws to align with revised Financial Action Task Force standards on countering the financing of weapons of mass destruction.
Related changes would be made to laws covering banking, financial advisers, financial holding companies, insurance, securities, trust companies and variable capital companies.
Featured image: Edited by Fintech News Singapore, based on image by thanyakij-12 via Magnific
