BT explains: What is regulatory capital and why has MAS asked DBS to set aside more of it?

AS a penalty for the widespread disruption of its digital banking services in November last year, DBS has been told by the Monetary Authority of Singapore (MAS) to set aside about S$930 million in additional regulatory capital as a buffer against operational risks.

What is regulatory capital?

MAS requires all banks to hold a minimum amount of capital relative to the size of risk exposures. This capital is predominantly in the form of equity and retained earnings. The principle behind this requirement is to ensure that a fixed percentage of a bank's assets are relatively safe, and readily available as a backstop in a crisis. (see Amendment note)