Policy Amendments Boost Local Incorporation Of Foreign Banks
The Singapore government has announced new rules with regards to the local incorporation of full foreign banks in the island state. The amendments to the policies have been revealed by Finance Minister Tharman Shanmugaratnam during the 39th annual dinner of the Association of Banks Singapore (ABS).
According to the Minister, big foreign banks would be required by the Monetary Authority of Singapore to incorporate their operations in Singapore. These banks share bigger domestic deposits in the market than other banks. The MAS will be holding consultation with each bank, which have been categorized under the Qualifying Full Banks (QFB) Programme, whether they meet the requirements and should be obliged to incorporate their operations in Singapore.
Banks that are currently part of the QFB programme are Citibank Singapore, HSBC, Maybank, Standard Chartered Bank, BNP Paribas, State Bank of India, ICICI Bank, and the Australia and New Zealand Banking Group (ANZ). These banks are allowed to set up branches of up to 50 branch locations in Singapore.
The MAS is also planning to allow a few QFBs to put up to 35 branches in Singapore, depending on the free trade agreements signed by both Singapore and the home countries of the QFBs.
Many banking leaders who attended the event were very enthusiastic about the government’s move of further diversifying Singapore’s banking sector. According to one banking executive, the move definitely enhances their presence in the local market and helps them reach out to more customers.
The move comes at a time when financial security and stability are questionable among foreign banks, given the debt crisis that’s currently happening in Europe and the recent financial crunch in the United States. The new policy will allow foreign banks to gain a foothold in the local Singapore financial system, and at the same time, provide greater stability and depositor protection.