Banks in Singapore

Singapore is an internationally acclaimed financial centre, serving not only its domestic economy but also the entire Asia-Pacific region. The banking sector is a key player in the country’s financial market, which has quickly grown into one of the strongest industries in the world. The country’s sound economic and political environment, favourable legal and tax policies, honest institutions, and strict enforcement of laws against crime and money laundering have contributed to Singapore’s position as the second-largest international financial centre in Asia (after Hong Kong). Today, there are as many as 117 foreign banks and 6 local banks dominating the banking sector.

Factors contributing to the success of the banking sector in Singapore include:

• Opening up the local banking market.
• Local banks strengthening their regional operations through mergers and acquisitions.
• The expansion of foreign banks, some of which have made Singapore a regional and global platform for important banking services, increasing their competitiveness.
• Increasing competition, which has spurred the development of innovative products and more competitive pricing models.
• In addition to traditional lending and deposit-taking functions, well-established banking services such as corporate and investment banking are offered.
• Strict bank secrecy laws, tax incentives, and a range of wealth management services have contributed to the boom in private banking. Swiss giants Credit Suisse Group and UBS AG have expanded their private banking operations in Singapore to cater to the new needs of Asians and Europeans.
• Recognising and catering to the needs of the small and medium enterprises (SMEs) that make up Singapore’s sizeable banking market.

Banking regulations and legislation

The laws governing banking in Singapore can be found in the relevant Acts passed by Parliament (and their related subsidiary legislation), the common law, and the principles and rules of equity. The common law and equitable rules are derived from case law. The legislation not only regulates the banking industry in Singapore but also ensures that Singapore’s banking legal framework keeps pace with the latest developments in the financial sector. Relevant Acts relating to the banking industry include:

• Banking Act – The Banking Act (Cap 19, 2003 Revision) is the legislation governing commercial banks in Singapore.
• Monetary Authority of Singapore Act (Cap 186, 1999 Revision) — governs all matters relating to MAS and its operations.
• Anti-Money Laundering Regulations
• Guidelines on payment and settlement systems
• Securities and Futures Act

Role of the Monetary Authority of Singapore

In Singapore, the Monetary Authority of Singapore (MAS) is the de facto central bank. It was established in 1971 to regulate Singapore’s financial industry and help it develop into an international financial centre. Its main function is to ensure that the financial markets operate efficiently and smoothly in line with the country’s economic goals. MAS is responsible for the following.

• Implementation of monetary policy
• Head of Banking Systems
• Bankers to Government
• The Bankers
• Director, International Reserves Division
• Currency issuers
• Bank licence issuers
• Lender of last resort (LoR)

Major Banks in Singapore

There are 3 major banks in Singapore, mainly OCBC, UOB, etc:

• OCBC (OCBC Bank) is the oldest established Singaporean bank, founded in 1932 as a result of the merger of three local banks, the oldest of which was established in 1912. It is now the second-largest financial services group in Southeast Asia by assets and one of the highest-ranked financial services groups, with an Aa1 rating from Moody’s. UOB is recognised as one of the 50 safest banks in the world for financial strength and stability and is ranked as the best-managed bank in Singapore by The Asian Banker.
• UOB (United Overseas Bank) UOB was established in 1935 and is now a leading Asian bank with subsidiaries in Singapore, Malaysia, Indonesia, Thailand, and China.

Major foreign banks:

• HSBC – In Singapore, The Hongkong and Shanghai Banking Corporation Limited (HSBC) first opened its doors in December 1877. HSBC is recognised as a Primary Dealer in the Singapore Government Securities Market and an Approved Bond Intermediary (ABI). It received 33 awards from Global Finance at the Global Finance Awards 2006 by QFB.
• Standard Chartered – Standard Chartered began operations in Singapore in 1859 and today has the largest network of international banking branches in the Republic (20). It is the group’s second-largest consumer banking market and was granted a Qualified Full Bank (QFB) licence in 1999. It is the largest foreign institutional custodian bank in Singapore and has been ranked among the top banks in the Global Custodian’s Agent Bank Survey for seven consecutive years.
• ABN-AMRO Singapore- ABN AMRO is now owned by the Royal Bank of Scotland, Santander and the Dutch Government. Its various global operations are now separate from ABN AMRO and are integrated under each owner’s plan.
• Maybank Malaya- Bank Malaya’s operations in Singapore started in 1960 as a fully licensed commercial bank. Bank Malaya is currently one of the top five banks in ASEAN and is a fully qualified bank in Singapore. As of June 2008, Bank Malaya’s total assets in Singapore amounted to S$22.7 billion.
• BNP Paribas – BNP Paribas has been at the forefront of Singapore’s banking industry since 1968 and was granted QFB status in 1999. Today, BNP Paribas Singapore is the group’s regional hub for investment banking and private banking in the corporate and commercial sectors.
• Citibank – Citibank was the first American bank to open a branch in Singapore in 1902. Despite being a relative latecomer to retail banking, the bank has grown into a strong market player with major market shares in key businesses including unsecured lending, deposits, and investment and collateralized assets. Citibank was one of the first four foreign banks to obtain a Qualified Bank (QFB) licence in 1999.