SINGAPORE • The Monetary Authority of Singapore (MAS) said it plans to revise rules governing foreign banks with a substantial local presence that may allow them to open digital-only banking subsidiaries.
Under the enhanced framework, MAS will consider granting an additional full banking licence to foreign lenders which substantially exceed its Significantly Rooted Foreign Bank (SRFB) criteria, the central bank said in a statement yesterday.
“This will enable them to have the same flexibility as Singapore- incorporated banking groups to establish subsidiaries, including with joint-venture partners, to operate new or alternative business models such as a digital-only bank,” the statement said.
Banks around the world have been shutting branches and moving their services online, a trend that will likely be accelerated by the Covid-19 pandemic.
Last year, MAS announced plans to award as many as five new digital banking licences to non-banks, a move that is expected to create a new generation of rivals for the traditional lenders.
The enhanced framework “will strengthen the ability of SRFBs to complement the local banks as anchors to Singapore’s financial system”, MAS said.
In order to determine if the foreign bank substantially exceeds the criteria, MAS said it will take into account factors such as whether a significant portion of global key appointment holders are based in the country, the creation of a substantial number of jobs or counting a local group as a major shareholder.
MAS also said the local subsidiary of Standard Chartered plc (StanChart) is the first bank to qualify as an SRFB. Under the scheme, which was announced in 2012, StanChart will be able to open as many as 50 places of business across the city-state, of which 35 can be branches.
In a statement, StanChart said it welcomed the move and would invest an additional S$5 million (RM15.34 million) to boost talent development and re-skilling.
The bank will review its strategy “with a view to invest more and further deepen our presence in Singapore,” Patrick Lee, CEO of StanChart Singapore, said in the statement. — Bloomberg