Singapore's largest banks are a step closer to having to carry a dedicated cushion of capital and debt that can be written down or converted into equity if one of them fails. Parliament passed the Financial Services and Markets (Amendment) Bill 2026 on 6 October 2026, the same day Minister of State Alvin Tan opened its second reading on behalf of Deputy Prime Minister Gan Kim Yong, the Minister in charge of the Monetary Authority of Singapore (MAS).
The Bill does two things. Its main purpose is to give MAS the legal power to impose Total Loss Absorbing Capacity (TLAC) requirements on Division 6 financial institutions under the FSMA, starting with Domestic Systemically Important Banks (DSIBs). Alongside that, it makes technical changes so that MAS's supervisory powers expressly refer to proliferation financing, bringing the Financial Services and Markets Act 2022 (FSMA) into line with the updated Financial Action Task Force (FATF) Standards.
The Bill was first tabled on 8 September 2026, according to the MAS explanatory brief. Parliament's register of bills lists it as Bill No. 19/2026, with both the second reading and passage dated 6 October. Passage does not switch the powers on, however. Under its first clause, the resulting Financial Services and Markets (Amendment) Act 2026 starts to apply only from a date the Minister fixes by notice in the Gazette, and no such date had been announced at the time of writing.
Bridging the Resolution Gap: The Rationale for Ex-Ante TLAC
The FSMA already allows MAS to step in when a financial institution fails, for example, by writing down or converting what it owes to subordinated creditors. What it cannot yet do is require a bank to hold, in advance, a minimum stock of instruments designed to take those losses. TLAC fills that gap. It runs alongside ordinary capital rules, so that private investors, rather than taxpayers, bear the cost if a systemically important bank fails.
The concept comes from the Financial Stability Board, which set a TLAC standard for global systemically important banks after the Global Financial Crisis. In its consultation, MAS said the collapse of several US banks in 2023 showed that authorities also need to be ready to resolve lenders below that global tier whose failure would still hurt their home market.
The minister stressed that the change is preventive, not a response to weakness.
"Our DSIBs remain well-capitalised, well-managed, and continue to serve as strong anchors of Singapore's financial system."
Alvin Tan, Minister of State and MAS Board Member, speaking on behalf of Deputy Prime Minister Gan Kim Yong
What MAS proposed to the industry
The Bill itself creates the power, through a new Division 3 in Part 7 of the FSMA. The detailed requirements will be set out in a MAS notice, and were laid out in consultation paper (P011-2026) that ran from 13 May to 12 June 2026. MAS says feedback was taken into account in the Bill where appropriate, but it has not yet published a response confirming the final settings. The main proposals were:
- Calibration: locally headquartered DSIBs would hold external TLAC of 14% of risk-weighted assets, below the 18% floor the FSB applies to global banks, reflecting their smaller size and different risk profiles. MAS proposed no separate TLAC leverage ratio, citing its close supervision of banks' internal models.
- Foreign bank DSIBs: these would hold internal TLAC issued to their parent group, set at 75% to 90% of what they would need as standalone entities. The standalone figure would be calibrated at 18% for units of a global systemically important bank and 14% for others.
- Eligible instruments: instruments would need to be fully paid in, unsecured, free of netting and derivative features, with at least a year left to run or no maturity, and capable of being written down or converted by MAS. Deposits are excluded, and common equity used to meet the capital conservation buffer could not be counted twice.
- Retail investors: TLAC instruments sold to retail investors in Singapore would not count, and DSIBs would be expected not to distribute them, or products referencing them, to that market.
- Timing and disclosure: banks would have five years from MAS notification to comply, and would report TLAC amounts, composition, creditor ranking and the ratio to risk-weighted assets either quarterly or semiannually.
The speech named those four areas as the core of the consultation but did not restate any of the figures, which remain proposals until MAS issues its notice.
Although the requirements are aimed at DSIBs at the outset, the consultation said the new provisions would also let MAS extend similar requirements to other Division 6 financial institutions if domestic or international developments called for it.
Proliferation financing made explicit
The second part of the Bill is narrower. MAS's anti-money laundering rules already require financial institutions to manage the risk of financing weapons of mass destruction, and its supervision already covers that risk. What changes is the legal footing. The FSMA gains a definition of proliferation financing; the risks MAS watches for under the Act are expanded to include it; and MAS can now issue directions or regulations aimed at preventing it. The regulator also gets clear authority to help local agencies and overseas supervisors that oversee the same risk. Knock-on amendments reach seven other statutes that MAS administers, including the Banking Act 1970, the Insurance Act 1966, and the Securities and Futures Act 2001.
Proliferation financing is already on Singapore banks' agenda. It was one of the three priority risks in the first phase of the industry platform that MAS now plans to expand to more banks within two years, and it closely aligns with the screening work firms already carry out under Singapore's targeted financial sanctions framework.
"Sir, the amendments in this Bill will strengthen Singapore's resolution framework and ensure our laws are better aligned with international standards relating to countering proliferation financing."
Alvin Tan, Minister of State and MAS Board Member, speaking on behalf of Deputy Prime Minister Gan Kim Yong
Immediate Operational Priorities for Compliance
For treasury, capital and regulatory reporting teams at the DSIBs, the practical work is a multi-year funding plan: mapping existing regulatory capital and senior debt against the proposed eligibility criteria, checking that contractual bail-in and write-down clauses would hold up under foreign governing law, and building the reporting needed for regular TLAC disclosure. Foreign bank DSIBs should open early discussions with their parent groups and home resolution authorities on how they would meet an internal TLAC requirement.
Wealth and distribution teams across the market should review whether any product shelves or structured notes reference bank capital or senior debt that could fall within the retail restriction. Financial crime teams at all MAS-regulated firms should confirm that proliferation financing is treated as a distinct risk in their enterprise-wide assessments and controls, rather than folded into sanctions screening alone.
The next markers are the commencement date and the MAS notice and feedback response, which will finalise the TLAC numbers.
