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Singapore central bank enhances scheme for international lenders

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The Monetary Authority of Singapore said a Significantly Rooted Foreign Bank (SRFB) that 'substantially exceeds the criteria for significant rootedness' may, in the future, be given extra privileges. AFP

Singapore central bank enhances scheme for international lenders

The Monetary Authority of Singapore (MAS) on Monday announced that it will enhance the Significantly Rooted Foreign Bank (SRFB) scheme such that foreign banks with a deep presence in Singapore could one day be allowed to open digital-only banks.

It also named the London-based Standard Chartered Bank as the first SRFB in Singapore, allowing it to operate up to 50 places of business, double its current cap.

The banking regulator said an SRFB that “substantially exceeds the criteria for significant rootedness” may, in the future, be given extra privileges, including the ability to establish a separate subsidiary to develop alternative business models.

Under the enhanced SRFB framework, MAS will consider granting an additional full bank licence to an SRFB that substantially exceeds the baseline criteria.

MAS said: “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 enhanced SRFB Framework will strengthen the ability of SRFBs to complement the local banks as anchors to Singapore’s financial system.”

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.

Under the SRFB framework announced in 2012, Qualifying Full Banks (QFBs) that have become significantly rooted in Singapore are allowed to establish an additional 25 places of businesses, of which up to 10 may be branches.

This is up from the 25 places of businesses or branches that QFBs are allowed to have.

SRFBs are only awarded as part of an overall package negotiated under free trade agreements with these banks’ home countries.

To determine if a QFB is significantly rooted, MAS considers a range of attributes, including the bank’s alignment of economic interests with Singapore, local business presence, and commitment to Singapore’s financial stability and development in the long term.

Also on Monday, StanChart Singapore CEO Patrick Lee welcomed the MAS announcement and said the bank would review its strategy and development plans, “with a view to invest more and further deepen [its] presence in Singapore”.

It told The Straits Times it currently has 18 places of business, of which 16 are bank branches.

Since 2018, to accelerate digitalisation and business growth, StanChart has increased its headcount in Singapore from 8,000 to 10,000 – of which more than 1,200 roles are in future growth areas such as digital banking, international banking, cyber, data solutions, analytics and cloud.

The bank announced in June that it would invest a further S$5 million (US$3.6 million) over three years to boost talent development and re-skilling in support of ongoing plans to grow the business and accelerate digitalisation.

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 an $80 billion balance sheet backed by $6 billion of capital.

Lee said: “We are also the only international bank that has adopted Singapore as its global operational and innovation headquarters, with a significant share of our global management team based here.”



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