Singapore has moved to give its financial regulator the power to impose total loss absorbing capacity requirements on the country's domestic systemically important banks. The Financial Services and Markets (Amendment) Bill 2026 was moved for its second reading in Parliament by Alvin Tan, Minister of State, on behalf of Gan Kim Yong, the Deputy Prime Minister and chairman of the Monetary Authority of Singapore.
Total loss absorbing capacity is the stack of equity and subordinated debt that a bank must hold so that, if it fails, the losses fall on its investors rather than on depositors or the state. The instruments are written down or converted into equity at the point of resolution. The international standard was agreed after the financial crisis and has been applied to global systemically important banks for years; what this bill does is extend an equivalent regime to banks that are systemically important within Singapore alone.
The distinction matters. A global systemically important bank is designated by the Financial Stability Board and its requirements are set internationally. A domestic systemically important bank is designated by its own regulator, and until now the Monetary Authority of Singapore has had capital and liquidity powers over that group without an explicit statutory basis for a loss absorbing capacity requirement on top of them.
The commercial consequence for the banks concerned is a question of funding cost rather than of viability. Instruments that are eligible for loss absorbing capacity price above ordinary senior debt precisely because they are designed to absorb losses, so a bank required to hold more of them replaces cheaper funding with dearer funding. Where the requirement lands relative to a bank's existing capital stack determines whether that is a rounding error or a real cost, and the bill itself does not set the calibration. That will come from the authority in subsequent notices.
The wider reading is about Singapore's position rather than its banks. A jurisdiction that wants to be treated as a first tier financial centre has to be able to show counterparties and foreign supervisors that a failure inside its borders can be resolved without a public rescue. Having the power on the statute book is part of that demonstration, and it is the kind of measure that is legislated in calm conditions precisely because it cannot be legislated in a crisis.
The bill remains at second reading. Passage is not confirmed in the published parliamentary record, and the detail of which institutions are affected and at what level will depend on the notices the authority issues once the legislation is in force.
