Some five local banks have been identified as Domestic Systemically Important Banks (DSIBs) by Qatar Central bank in its efforts towards increasing their “financial strength and withstand onslaught of any external shocks.”
Recognising the fact that distress of domestic systemically important banks can affect financial system domestically, a DSIB framework was adopted in 2012.
In implementing the framework for DSIBs, QCB sought to achieve the objectives of identifying and designating domestic systemically important banks in Qatar, reducing the probability of failure of these identified DSIBs and reducing the impact of their distress or failure, QCB said in its 8th Financial Stability Review. 
The key components of the DSIB framework were assessment methodology, higher loss absorbency capital requirement, capital and recovery plans and increased supervisory scrutiny to achieve the desired objectives. 
QCB, in line with the Basel Committee on Banking Supervision (BCBS) requirements, adopted an indicator-based methodology to determine systemic importance of banks in Qatar.
Banks were assessed on four specific factors such as size, interconnectedness, substitutability and complexity.
Each of these main factors are assessed through sub-factors adopted based on an analysis of their applicability to the Qatari economy and the banking sector.
Banks are assessed twice a year in June and December. 
The data submitted to QCB are reviewed by the external auditor of the bank and as a part of full audit at end of year. 
Since 2016, the DSIBs are required to hold additional capital charge ranging from 0.5% to 2.5% according to the degree of their domestic systemic importance.
DSIBs are required to prepare recovery plans that outline credible recovery actions that could be implemented to restore the DSIB businesses to a stable and sustainable condition in the event of severe stress, QCB said. 
Banks are also required to take into account, not to rely on public funding to be available from QCB or from authorities in other jurisdictions, in case of severe stress or default.
Developments in the area of macro prudential policy tools during the year, QCB said, were adoption and implementation of the Internal Capital Adequacy Assessment Process (ICAAP) and DSIBs.
The ICAAP capital charge constitutes a part of the minimum capital requirement. A 1% minimum ICAAP charge is applicable to all banks. The ICAAP reports and the underlying processes are required to be reviewed by the bank’s external auditors prior to submission of the same to QCB. 
All the ICAAP requirements are subject to the Supervisory Review and Evaluation Process (SREP), which includes review and evaluation of each bank’s ICAAP, the performance of independent assessment of each bank’s risk profile and, if necessary, taking prudential measures and other supervisory actions. 
QCB said it may intervene at an early stage and will monitor when a bank is falling below the minimum threshold required to support the risk characteristics of the bank. 
QCB may also require a rapid remedial action to maintain or restore the required capital base.