Capital instruments issued before 2026 are permanently grandfathered if other Notice 637 conditions are met, reducing any pressure to redeem outstanding issues purely for regulatory reasons.
The impact to big Singapore banks' capital structures from the Monetary Authority of Singapore's (MAS) retail ban on AT1s/T2s (additional tier 1 capital and tier 2 capital) is limited. The regulator's new capital debt issuance rules boost retail protection, systemic stability and support banks' capital planning. A capital cliff is unlikely if grandfathered instruments meet Notice 637 conditions. Local banks need to issue about US$13 billion ($16.88 billion) in 2026 in order to fully optimise capital as rates fall.
MAS's changes to Notice 637, effective Jan 1, 2026, restrict the issuance of AT1s/T2 capital debt to non-retail investors in Singapore, applying only at issuance. Banks must insert clauses in agreements with intermediaries forbid retail sales, and MAS has told intermediaries not to facilitate retail access to such instruments.
