The Monetary Authority of Singapore (MAS) will enhance a scheme such that foreign banks with a deep presence in Singapore could one day be allowed to open digital-only banks as a separate unit with less paid-up capital in the way local lenders are able to do.
It announced this yesterday, along with naming Standard Chartered Bank the first Significantly Rooted Foreign Bank (SRFB), allowing the lender to double its footprint in Singapore.
Under an enhanced SRFB framework, MAS said, it will consider granting an additional full bank licence to an SRFB that substantially exceeds the baseline criteria.
"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," said the regulator.
In order to determine if a 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.
"The enhanced SRFB framework will strengthen the ability of SRFBs to complement the local banks as anchors to Singapore's financial system," MAS said.
Welcoming the move, Mr Wee Ee Cheong, deputy chairman and chief executive officer of United Overseas Bank, told The Straits Times the enhancement of the SRFB framework "will help deepen the commitment of foreign banks to Singapore's progress through the creation of more local jobs, as well as more banking products and services for the benefit of customers over the long term. The move will also help boost the financial sector, our economy and investor confidence in Singapore".
The original framework was announced in 2012, with SRFB awards to be granted to "significantly rooted" Qualifying Full Banks (QFBs) as part of an overall package negotiated under free trade agreements with these foreign banks' home countries. The first free trade pact that includes SRFB commitments, the EU-Singapore Free Trade Agreement, came into force in November last year, opening the door for StanChart's SRFB award.
The London-based lender can now operate up to 50 places of business in Singapore, of which 35 can be branches. This is double the 25 places of business or branches that QFBs can open. StanChart currently has 18 places of business, of which 16 are bank branches, a spokesman told ST.
There are nine QFBs in Singapore, which are allowed to operate in more locations than non-QFBs. Of the nine, four - StanChart, Citibank, Maybank and HSBC - have locally incorporated their retail businesses as required by MAS.
To qualify for SRFB privileges, MAS considers a range of attributes, including the bank's alignment of economic interests with Singapore's, local business presence, and commitment to Singapore's financial stability and development in the long term.
StanChart Singapore chief executive Patrick Lee yesterday welcomed the SRFB award and said the bank would review its strategy and development plans, "with a view to invest more and further deepen (its) presence in Singapore".
Mr Lee noted that as one of the oldest banks here, with a history of serving clients for over 160 years, StanChart "has remained steadfast in its commitment to Singapore". Last year, it became the first and only international bank to incorporate all its businesses in Singapore. It is also the largest foreign banking subsidiary here, with a US$80 billion (S$110 billion) balance sheet backed by US$6 billion of capital.
Since 2018, StanChart has increased its headcount in Singapore from 8,000 to 10,000 - of which over 1,200 roles are in future growth areas such as digital banking, international banking, cyber, data solutions, analytics, cloud and artificial intelligence.
The bank, which counts Temasek as a major shareholder, announced in June that it would invest a further $5 million over three years to boost talent development and reskilling in support of ongoing plans to grow the business and accelerate digitalisation.