The State Bank of Pakistan (SBP) has designated Domestic Systemically Important Banks for the year 2025.
SBP has carried out an annual assessment of banks based on their financial statements as of December 31, 2024.
The central bank designated National Bank of Pakistan, United Bank Limited, and Habib Bank Limited as D-SIBs for the year 2025.
These designated banks need to comply with the following additional Common Equity Tier-1 (CET-1) capital requirements with effect from March 31, 2026. In addition to enhanced supervisory requirements outlined in the D-SIBs framework:
BUCKET Name of Institution Additional CET-1 Requirement for Bucket
D National Bank of Pakistan 2.5%
C United Bank Limited 1.5%
C Habib Bank Limited 1.5%
Global-Systemically Important Banks (G-SIBs) branches in Pakistan must maintain extra CET-1 capital. Branches will hold it against their risk-weighted assets in the country. The rate will follow the Financial Stability Board’s requirement for their respective principal G-SIB.
SBP announced the designation of D-SIBs in accordance with the Framework for ‘Domestic Systemically Important Banks (D-SIBs)’ published in April 2018. It amended the framework in December 2022.
Framework:
The framework introduced by SBP is consistent with international standards. It duly takes into account the local circumstances of the financial industry and economy.
It specifies the methodology for the identification of D-SIBs. AND enhanced regulatory and supervisory requirements and implementation guidelines for D-SIBs. The enhanced requirements aim to further strengthen the resilience of systemically important banks against shocks. It augment their risk management capacities.
Under the framework, the central bank identified D-SIBs on an annual basis via a two-step process. In the first step, Sample D-SIBs are identified according to prescribed quantitative and qualitative criteria. In the second step, D-SIBs are designated from amongst the sample D-SIBs based on institutions’ composite systemic scores in terms of their size, interconnectedness, substitutability and complexity.
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