MAS to allow some foreign banks to operate up to 50 places for business?

Here's what you need to know about the changes in MAS' Qualifying Full Bank programme.

In a release, the Monetary Authority of Singapore (MAS) announced changes to its Qualifying Full Bank (QFB) programme to encourage foreign banks to deepen their roots in Singapore in a way that strengthens Singapore’s financial stability.

MAS will require existing QFBs that are important to the domestic market to locally incorporate their retail operations. In determining whether a QFB will be required to locally incorporate its retail operations, we will review factors such as the QFB’s market share of domestic deposits. MAS will consult QFBs on the criteria for requiring local incorporation.

For QFBs that operate as local subsidiaries, a very small number may become significantly rooted in Singapore over time. MAS will consider granting such QFBs an additional 25 places of business, of which up to 10 may be branches. This will be part of an overall package negotiated with these QFBs’ home countries which are free trade agreement (FTA) partners with Singapore. These QFBs will be able to operate up to 50 places of business in Singapore.

To determine if a QFB is significantly rooted, MAS will consider a range of quantitative and qualitative attributes, including whether –

• the majority of the Board of its local subsidiary are Singaporeans and Permanent Residents and what types of businesses are conducted by the local subsidiary;
• Singapore is one of the QFB’s major markets contributing a substantial part of profits and assets to the bank group;
• major business lines and key decision makers are headquartered in Singapore; and
• the bank serves a comprehensive spectrum of the local community in Singapore.

The QFB will have to demonstrate its long-term commitment to Singapore’s financial stability and development.

In addition, MAS will continue to consider awarding new QFBs only under FTA negotiations. New QFBs that are granted under future FTA offers will have to first locally incorporate before they may establish up to 25 places of business.

The changes announced relate to QFBs only. QFBs have greater branching privileges than other foreign banks, and hence, greater access to the retail market. For QFBs with a significant share of domestic retail deposits, local incorporation is an additional safeguard for domestic retail depositors. Local incorporation can also bring benefits to a bank. It can demonstrate a bank’s commitment to depositors and other stakeholders and help the bank secure more long-term, stable sources of funding at a time of growing financial volatility and uncertainty.

Mr Samuel Tsien, Chief Executive Officer, OCBC Bank, commented: “We always welcome healthy competition. We will ensure that we will be at the forefront of providing innovative products and services to serve our customers and grow our business.”