SINGAPORE - Banks in Singapore have adequate capital buffers to withstand severe shocks, the Monetary Authority of Singapore said.

Its industry-wide stress test of domestic systemically important banks (D-SIBs) showed these banks are well-positioned to weather potential shocks even in adverse situations such as a deep global recession and protracted severe financial stresses, thanks to strong capital buffers.

The three local banks - DBS, OCBC, UOB - as well as Citibank, Maybank, Standard Chartered and HSBC are in the list of D-SIBs which face additional supervisory measures.

Locally incorporated D-SIBs need to meet higher capital requirements than those for ordinary banks - a minimum Common Equity Tier 1 capital adequacy ratio (CAR) of 6.5 per cent, a Tier 1 CAR of 8 per cent and a Total CAR of 10 per cent.

These are also more stringent than the Basel III minimum requirements. Basel III is an international regulatory framework for banks that sets minimum standards on capital adequacy, liquidity, and leverage to make the global banking system more resilient.

Each of these banks maintains sound credit risk management practices with adequate provisioning buffers to absorb potential credit losses, MAS said in its annual financial stability review on Nov 5.

In its assessment of Singapore’s banking sector, MAS said the overall banking vulnerability level remains benign.