Starting Business has the knowledge and expertise to assist you with opening your Singapore offshore account. The information below provides details about the Singapore banking system, and details on opening a Singapore bank account. You will find details on the laws and regulations that govern the banking system, as well as a list of local and international banks that operate in Singapore.
Singapore is one of the leading financial centers in the world and a key financial hub in Southeast Asia. Not surprisingly, the country boasts one of the most advanced banking systems, with roughly 700 local and foreign banking and financial institutions providing services ranging from consumer banking and asset management to foreign exchange, investment banking and specialized insurance services. As of year-end 2004, Singapore’s domestic banking sector had total assets/liabilities of roughly US$230 billion. Leading banks in Singapore include ABN AMRO, Citibank, DBS, HSBC, OCBC, Standard Chartered and UOB.
The central bank for the country is the Monetary Authority of Singapore (MAS), which sets monetary policy, regulates banking and financials institutions, and issues currency. Although there is not currently a government-backed deposit insurance program, the MAS is planning on instituting one in the near future.
Commercial banks in Singapore are licensed under and governed by the Banking Act. They may undertake universal banking. Besides commercial banking, which includes deposit taking, the provision of cheque services and lending, the banks may also carry on any other business which is regulated or authorized by MAS, including financial advisory services, insurance broking and capital market services. (Section 30 of the Banking Act defines the permissible activities). Commercial banks and their representatives do not have to be separately licensed to carry out such activities, but must comply with the business conduct requirements prescribed in the Financial Advisers Act (FAA), Insurance Act (IA) and Securities and Futures Act (SFA) accordingly.
In July 2001, the Banking Act was amended to prohibit banks from engaging in non-financial activities. Banks were given three years, until July 2004, to complete divesture of their non-financial businesses. In August 2003, the grace period was extended by two years to July 2006 , for banks which have applied to the MAS for extension.
There are presently 113 commercial banks in Singapore. Five of these are locally incorporated and are owned by three local banking groups. Commercial banks operate as full banks, wholesale banks or offshore banks.
Full banks may provide the whole range of banking business approved under the Banking Act. There are currently 28 full banks in Singapore. Five of these are locally- incorporated entities under the 3 local banking groups, while the remaining 23 are branches of foreign-incorporated banks. Six of these 23 foreign bank branches have been awarded Qualifying Full Bank (QFB) privileges.
Foreign full banks with QFB privileges may operate a total of 15 locations for sub-branches and/or off-premise automated teller machines (ATMs), of which a maximum of 10 can be sub-branches. These banks may share ATMs among themselves, and relocate their sub-branches freely. Since 1 July 2002, QFBs have been allowed to provide debit services through an EFTPOS network, offer Supplementary Retirement Scheme and CPF Investment Scheme accounts, and accept fixed deposits under the CPF Investment Scheme and Minimum Sum Scheme.
Wholesale banks may engage in the same range of banking business as full banks, except that they do not carry out Singapore Dollar retail banking activities. They operate within the Guidelines for Operations of Wholesale Banks issued by MAS.
There are 48 wholesale banks in Singapore, all of which are branches of foreign banks.
Offshore banks can engage in the same activities as full and wholesale banks for businesses transacted through their Asian Currency Units (ACUs). The ACU is an accounting unit, which the banks use to book all their foreign currency transactions conducted in the Asian Dollar Market (ADM). The banks’ Singapore dollar transactions are separately booked in the Domestic Banking Unit (DBU). The scope of business transacted in offshore banks’ DBU has slightly more restrictions on dealings with residents as compared with wholesale banks. Offshore banks operate within the Guidelines for Offshore Banks issued by MAS.
Under the banking liberalization programme, offshore banks were given greater flexibility in Singapore dollar wholesale business. Offshore banks had their Singapore dollar-lending limit raised to S$500 million. They are now allowed to engage in Singapore dollar swaps in respect of proceeds arising from the issue of Singapore dollar bonds managed or arranged by them.
There are 38 offshore banks in Singapore, all of which are branches of foreign banks.
Besides the three categories of commercial banks, financial institutions may also operate as merchant banks. Merchant banks are approved under the Monetary Authority of Singapore Act and their operations are governed by the Merchant Bank Directives. Their ACU operations are also subject to the Banking Act.
The typical activities of merchant banks include corporate finance, underwriting of share and bond issues, mergers and acquisitions, portfolio investment management, management consultancy and other fee-based activities. Most merchant banks have, with MAS’ approval, established ACUs , through which they compete with commercial banks in the Asian Dollar Market. In their DBU, merchant banks may not accept sight or savings deposits or borrow from the public. However they may accept deposits or borrow from banks, finance companies, shareholders and companies controlled by their shareholders.
There are presently 46 merchant banks in Singapore.
Finance companies focus on providing small-scale financing, including installment credit for motor vehicles and consumer durables, and mortgage loans for housing. Finance companies are licensed under and governed by the Finance Companies Act.
Finance companies may not offer deposit accounts, which are repayable on demand by cheque, draft or order. They are also not allowed to grant unsecured credit facilities exceeding S$5,000 to any person or deal in any foreign currency, gold or other precious metals or acquire foreign currency denominated stocks, shares or debt securities. Finance companies with capital funds of more than S$100 million may, however, apply for exemption to deal in foreign currencies or precious metals and foreign currency denominated stocks, shares or debt securities. The exemption is conditional on the aggregate amount of foreign currency exposure not exceeding 10 per cent of the finance company’s capital funds at any time. There are 3 finance companies in Singapore.
Some of the major financial institutions operating in Singapore under full license:
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