Annual Report 2023

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From Our Leadership

Rafiz Azuan Abdullah

Chief Executive Officer

Dato Sri (Dr) Zukri Samat

Chairman

Value Creation Model

Material Matters

Readiness for Resolution and Crisis Management

Definition

Ensuring effective execution of intervention or resolution actions:

a. Continuously enhancing PIDM’s internal readiness in relation to intervention and resolution;
b. Executing resolution plans effectively and ensuring robust crisis coordination actions among the Financial Safety Net (FSN) players and service providers;
c. Ensuring member institutions are clear about PIDM’s regulatory expectations to support the implementation of PIDM’s resolution strategies; and
d. Ensuring robust liquidity management plan that covers management of liquidity crisis before, during and after a Non-Viability Trigger (NVT) event.

Capitals

• Financial capital
• Human capital
• Intellectual capital
• Manufactured capital
• Social and relationship capital

Principal Risk

• Insurance risk
• People risk
• Reputation risk
• Operational risk

Strategy

KRA 1 - Continuously enhancing PIDM’s internal readiness to ensure robust intervention and execution of resolution actions.

KRA 2 - Developing resolution plans for member institutions and having service providers ready to immediately step in and support PIDM to effectively resolve troubled member institutions.

KRA 3 - Strengthening FSN players’ readiness through effective crisis management arrangements with and among key stakeholders.

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Awareness, Trust and Confidence, and
Crisis Communication

Awareness, Trust and Confidence, and Crisis Communication

Definition

Ensuring the confidence of depositors and other financial consumers through comprehensive communication of PIDM’s mandate, our role, as well as administering an effective protection system.

Having comprehensive plans to communicate effectively before and during crisis situations to avert or mitigate panic behaviours.

Capitals

• Financial capital
• Human capital
• Intellectual capital
• Social and relationship capital

Principal Risks

• Reputation risk
• Insurance risk

Strategy

KRA 4 - Ensuring public and media readiness by maintaining strong awareness, understanding and advocacy of PIDM among the public and media.

KRA 5 - Enhancing the effectiveness and relevance of PIDM’s protection coverage and role as financial consumer protection authority.

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Leadership, Employee Engagement and Development

Definition

Enabling PIDM’s readiness to deliver our mandate effectively through:

a. Effective employee engagement;
b. Continuous upskilling for current and future needs;
c. Cultivating a digital and sustainability-focused culture; and
d. Succession planning.

Capitals

• Financial capital
• Human capital
• Social and relationship capital

Principal Risks

• People risk
• Operational risk

Strategy

KRA 6 - Ensuring strong talent capabilities and strengthening PIDM’s culture to meet our strategic direction, as well as alignment to the overall changing operating environment.

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Future-Ready Operations

Definition

Addressing challenges brought by digital advances:

a. Leveraging the exponential increase in computing power to enhance the efficiency and effectiveness of PIDM’s operations;
b. Transition from cybersecurity to cyber resilience; and
c. Enhancing collaboration and integration of processes, systems and people.

Capitals

• Financial capital
• Human capital
• Manufactured capital

Principal Risks

• Operational risk
• Reputation risk
• People risk
• Strategic risk

Strategy

KRA 7 - Modernising PIDM’s IT infrastructure, processes, and cybersecurity to augment future readiness to effectively deliver PIDM’s mandate.

KRA 8 - Leveraging applications and data analytics to improve PIDM’s resolution readiness and operational effectiveness

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Corporate Governance

Definition

Commitment to transparency, accountability, integrity and sustainability, and ensuring effective strategic management and sound management practices.

Capitals

• Financial capital
• Human capital
• Intellectual capital
• Manufactured capital
• Social and relationship capital

Principal Risks

• Operational risk
• Reputation risk

Strategy

KRA 9 - Applying relevant Environmental, Social and Governance (ESG) elements as the guiding principle across PIDM’s operations.

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For more information about PIDM's Material Matters, click here

Performance at-a-Glance

Realising Readiness for Resolution and Crisis Management

• We advanced our resolution planning and resolution readiness agenda by issuing the Resolution Planning Guidelines.

• We organised the inaugural National Resolution Symposium and launched the Resolution Case Studies booklet.

• We continued our practice of conducting simulation exercises and interagency collaboration efforts to enhance our readiness for crisis.

• We revised our Differential Premium Systems Regulations to, among others, provide meaningful incentives towards the orderly resolution of member institutions.

• We also executed Memoranda of Understanding (MOU) with the Single Resolution Board (SRB), the European Banking Union’s and with the Indonesian Deposit Insurance Corporation (IDIC) to further enhance cross-border collaboration and promote the exchange of best practices and expertise in resolution.

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Enhancing Confidence in PIDM’s Protection System

• We increased our leverage on digital and social media platforms and intensified our engagements and collaborations with targeted stakeholder groups, to improve the public’s level of familiarity and understanding of PIDM’s role in the financial system.

• We managed to achieve a public awareness level of 86% based on the results of our annual nationwide public awareness survey, marking the third consecutive year we have achieved a level of 80% and above. We also managed to achieve an increased advocacy level of 62%.

• We supported the national financial literacy agenda through our financial literacy programme, which includes our #SediaPayungKewangan campaign, as well as through our association with the Financial Education Network (FEN) and collaborations with other FEN members. This includes our financial literacy outreach programme to Sabah.

• We also conducted a behavioural research study which has provided valuable insights into financial consumer behaviours during times of crisis, allowing us to refine our communication strategies, stakeholder engagement practices and relevant public policies, for more effective results in the future.

• We continued to play an active role in bilateral and multilateral fora in the international stage, such as the International Association of Deposit Insurers (IADI), International Forum of Insurance Guarantee Schemes (IFIGS) and the Executives’ and Meeting of East Asia-Pacific Central Banks (EMEAP), with a particular focus on the area of resolution. We also chaired the Research Technical Committee of the Asia Pacific Regional Committee (APRC) of IADI.

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Organisational Effectiveness, Digital Transformation and Strong Governance

• We rolled out the learning and development framework in our efforts to build a future-ready and resolution-ready workforce through upskilling and reskilling.

• We absorbed the pilot batch of Resolution Trainees into our workforce after their graduation and commenced the second batch of the programme.

• We also continued to reinforce our corporate values via various employee engagement programmes.

• We continued to make strides in our digital transformation journey and modernised our infrastructure towards being future-ready.

• We fortified our cybersecurity posture to ensure our resilience by testing the effectiveness of our systems and the awareness of our employees in this area.

• We also maintained our commitment towards sustainability and corporate social responsibility by carrying out recycling-related initiatives and incorporating environmental sustainability elements in our corporate activities.

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For more information about PIDM's Performance, click here

Financial Performance at-a-Glance

KEY REFLECTIONS FROM SPRING 2023 BANK FAILURES

In March 2023, Silicon Valley Bank (SVB) collapsed within a mere 48 hours after four decades in operation in the United States (US). Across the Atlantic, Credit Suisse (CS), a 167-year-old global systemically important bank (G-SIB), was acquired by another G-SIB following long-standing difficulties and extreme episodes of liquidity stress.

These failures, known as “Spring 2023 Bank Failures”, unleashed shockwaves that reverberated across the global financial landscape. However, on the home front, our member banks remain unscathed amid the banking stress in the US and Europe. Their resilience was anchored by sound fundamentals and strong buffers. Read more