Response to "How Are Foreign Banks in Singapore Regulated" (Mypaper, 26 Sep 2008)
I refer to "How are foreign banks in Singapore regulated" (Mypaper, 26 September 2008).
MAS requires all banks in Singapore to comply with requirements on capital adequacy, asset maintenance, liquidity, and limits on credit and investment exposures. In addition to these regulatory requirements, MAS expects banks to have in place robust risk management practices, which include maintaining sufficient liquidity and setting prudent limits to ensure that their exposures are well diversified.
Our regulations also require foreign bank branches in Singapore to maintain a proportion of the assets of their Singapore branch in safe and liquid Singapore dollar denominated and Singapore-domiciled assets. Singapore’s banking sector continues to function normally. MAS has been in close contact with banks here, including the major retail banks, to assess the impact of the current financial turmoil. We are also maintaining contact with the respective head offices of foreign banks and their parent regulators to monitor developments at the home countries, where necessary.
Under the Banking Act, depositors are given priority claim over a bank’s assets, ahead of other unsecured liabilities, bond-holders and shareholders. In addition, an individual’s Singapore dollar current, savings and fixed deposit accounts with a retail bank or finance company in Singapore are insured up to S$20,000 per institution under the deposit insurance scheme administered by the Singapore Deposit Insurance Corporation. A deposit insurance payout could take place if a bank that is a member of the deposit insurance scheme is wound up, insolvent or unable to meet its obligations. This is regardless of whether the bank in question is a local or foreign bank.
Angelina Fernandez Director (Communications) Monetary Authority of Singapore