SINGAPORE: At the 39th annual dinner of the Association of Banks Singapore (ABS), Finance Minister and Deputy Prime Minister Tharman Shanmugaratnam announced that the Monetary Authority of Singapore (MAS) would be requiring the country's existing foreign banks deemed ‘important to the domestic market' to incorporate their retail operations in Singapore. The banks, which are classified under the government's Qualifying Full Banks (QFB) Programme, will be evaluated based on their market share of domestic deposits. The MAS will also take other factors into consideration, and has said that it will consult each bank on the criteria that will determine if they need to incorporate in Singapore. Singapore has a large and well-diversified banking sector. Apart from the large banks, MAS may also allow a small number of QFBs to increase their number of business locations to a total of 50, including up to 35 branches. The number of additional locations granted will depend on the various free trade agreements that have been signed between Singapore and the originating countries of the QFBs. At present, there are eight QFBs in Singapore: Australia and New Zealand Banking Group (ANZ), BNP Paribas, Citibank Singapore, HSBC, India's ICICI Bank and State Bank of India, Maybank, and Standard Chartered Bank. Currently, only Citibank has a locally incorporated entity in Singapore. QFBs are able to operate more branches and business locations compared to the many other non-QFB foreign banks in the country. Standard Chartered Singapore CEO Ray Ferguson was one of the many top banking executives at the dinner who were optimistic about the move, stating that “now foreign banks like ourselves who have shown that we're committed to and are significantly and deeply rooted in Singapore will potentially have the flexibility to enhance our physical presence and ability to reach out to and serve our customers.” The announcement is a positive sign that the Singapore government is open to the idea of large foreign entities coming in and playing major roles in the growth of Singapore's economy. It reinforces the government's policy of having an open economy in order to keep Singapore as a top global destination for business and finance. At the same time, having some QFBs incorporate locally is similar to helping them plant more roots in the Singapore financial system. This is in line with the government's efforts to bring about greater financial stability with its more conservative monetary policies, which are designed to prevent large shocks similar to the ones recently experienced in Europe and the United States. “The recent move by the government on QFBs incorporating locally is a win-win for all parties involved, as it brings about both financial growth and stability," said Ms. Jacqueline Low, Chief Operating Officer of Janus Corporate Solutions, a Singapore company registration agency and the parent of GuideMeSingapore.com. She adds, “the QFBs will be able to benefit from a more extensive network, while depositors in Singapore will be better off as the increased competition from by the newly-rooted QFBs will bring about improved service and rates."
