KARACHI: The National Bank of Pakistan, United Bank Ltd and Habib Bank Ltd have been designated as Domestic Systemically Important Banks (D-SIBs) for 2024.

On Thursday, the State Bank of Pakistan (SBP) announced this designation under the Framework for Domestic Systemically Important Banks notified in April 2018.

The framework is consistent with international standards and takes into account global best practices and local dynamics. It specifies the methodology for identifying and designating D-SIBs and enhanced regulatory and supervisory requirements and implementation guidelines.

The enhanced requirements aim to strengthen the resilience of the systemically important banks against shocks and further augment their risk management capacities.

The identification of D-SIBs involves a two-step process. In the first step, sample D-SIBs are identified each year based on the quantitative and qualitative criteria. In the second step, D-SIBs are designated from amongst the sample D-SIBs based on institutions’ composite systemic score in terms of their size, interconnectedness, substitutability and complexity.

In line with the D-SIBs framework, the State Bank has carried out the annual assessment based on banks’ financials as of December 31 2023.

These banks (NBP, HBL, UBL) will have to follow additional Common Equity Tier-1 (CET-1) capital requirements and implement the enhanced supervisory requirements.

Besides, branches of Global-Systemically Important Banks (G-SIBs) operating in Pakistan will be required to hold additional CET-1 capital against their risk-weighted assets in Pakistan at the rate applicable to the respective principal G-SIB.

Published in Dawn, August 30th, 2024