Monetary Authority of Singapore Annual Report 2012/2013

A ROBUST FINANCIAL CENTRE

A Regulatory Framework for Financial Holding Companies

In April 2013, the Financial Holding Companies Act (FHC Act) was enacted to extend MAS’ regulatory powers to non-operating holding companies that hold bank or insurance subsidiaries in Singapore. This new legislative initiative supports the established concept of group supervision. Under the FHC Act, MAS can designate an FHC for regulation where the FHC is an ultimate holding company of a financial group headquartered in Singapore or where doing so will strengthen its supervision of the Singapore bank or insurance subsidiary. The regulations are aimed at mitigating intra-group contagion risk, preventing the multiple use of capital within the group, and limiting group concentration risk exposures. The FHC regulatory framework is in line with international regulatory developments, where there is growing recognition among international regulators of the role of FHCs and the need to include FHCs in their scope of group-wide supervision.