KARACHI: The State Bank of Pakistan (SBP) designated National, United and Habib banks as Domestic Systemically Important Banks (D-SIBs) for the year 2025, requiring compliance with enhanced regulatory, supervisory and capital requirements.
The designation of D-SIBs is one of the key elements of supervisory framework for identification and mitigation of systemic risks and it is announced in accordance with Framework for ‘Domestic Systemically Important Banks (D-SIBs), the central bank informed in a statement issued here.
“SBP has carried out annual assessment of banks based on their financial statements as of December 31, 2024. As per the assessment, three banks i.e. National Bank of Pakistan, United Bank Limited, and Habib Bank Limited have been designated as D-SIBs for the year 2025,” the central bank announced.
Moreover, the SBP instructed bank branches of Global-Systemically Important Banks (G-SIBs) operating in Pakistan to maintain additional CET-1 capital against their risk-weighted assets in Pakistan at the rate prescribed by the Financial Stability Board for their respective principal G-SIB.
The framework -consistent with international standards and cognizant of the local financial and economic circumstances- specifies the methodology for the identification of D-SIBs, enhanced regulatory and supervisory requirements and implementation guidelines for D-SIBs, it stated, adding that the enhanced requirements aim to further strengthen the resilience of systemically important banks against shocks and augment their risk management capacities.
In addition to enhanced supervisory requirements set forth in the D-SIB framework, the designated banks need to comply with additional Common Equity Tier-1 (CET-1) capital requirements with effect from March 31, 2026 for meeting Higher Loss Absorbency (HLA).
The National Bank of Pakistan is designated in the ‘Bucket D’ with 2.5% additional CET-1 requirement while United Bank Limited and Habib Bank Limited- both in Bucket C- have to comply with 1.5% additional CET-1 requirement.
This regulatory requirement follows a bucketing approach, with the level of capital surcharge increasing with the systemic importance of the bank as determined by the composite systemic score.
Under the framework, the identification of D-SIBs is carried out on an annual basis via a two-step process. First, Sample D-SIBs are identified according to prescribed quantitative and qualitative criteria and in the second step, D-SIBs are designated from among the sample D-SIBs based on institutions’ composite systemic scores in terms of their size, interconnectedness, substitutability and complexity.
