The Monetary Authority of Singapore (MAS) has enhanced its Significantly Rooted Foreign Bank (SRFB) framework, which allows qualifying full banks (QFBs) that have deep roots in Singapore, to operate additional places of business (POBs).
MAS says it will also enhance the SRFB Framework so that in future, an SRFB that substantially exceeds the criteria for “significant rootedness” in Singapore may be given additional privileges. These privileges include the ability to establish a separate subsidiary to develop alternative business models.
Under the enhanced framework, MAS says it will consider granting an additional full bank licence to an SRFB that substantially exceeds the SRFB baseline criteria.
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 baseline criteria for QFBs include attributes such as a bank’s majority of board of its local subsidiary are Singaporeans and permanent residents, and Singapore being one of the QFB’s major markets that contribute a substantial part of profits and assets to the bank group.
To determine if an SRFB substantially exceeds the baseline criteria, MAS will consider a range of additional attributes of rootedness in Singapore. These include the bank’s full subsidiarisation of banking business operations in Singapore, and a significant proportion of global key appointment holders and business heads based in Singapore.
The SRFB framework was announced in 2012 by MAS Chairman Tharman Shanmugaratnam, who says that QFBs that are significantly rooted in Singapore and from jurisdictions that have a Free Trade Agreement (FTA) with Singapore are allowed to establish up to 50 POBs, of which up to 35 may be branches.
QFBs in Singapore, which are not awarded SRFB privileges, are allowed to establish up to 25 POBs.
MAS determines a bank’s significant rootedness based on a range of quantitative and qualitative attributes.
The first FTA that includes SRFB commitments, the EU-Singapore Free Trade Agreement (EUSFTA), entered into force on Nov 21, 2019.
On Monday (August 3), MAS says it will award SRFB privileges to Standard Chartered Bank (Singapore) Limited, which is the first bank to qualify as an SRFB under the EUSFTA commitments.
Standard Chartered Bank (Singapore) will be able to operate up to 50 POBs from August 3.
Wee Ee Cheong, Deputy Chairman and Chief Executive Officer of UOB says he welcomes the enhancement of the SRFB framework.
“It will help deepen the commitment of foreign banks to Singapore’s progress through the creation of more local jobs, as well as more banking products and services for the benefit of customers over the long term. The move will also help boost the financial sector, our economy and investor confidence in Singapore," he says.