MAS announces Enhancement of its Significantly Rooted Foreign Bank Framework
The Monetary Authority of Singapore (MAS) has announced that it will award Significantly Rooted Foreign Bank (SRFB) privileges to Standard Chartered Bank (Singapore), allowing it to operate additional places of business (POBs).
SCBSL is the first bank to qualify as an SRFB, MAS reported in a press release.
MAS will also enhance the SRFB Framework so that in the future, an SRFB that substantially exceeds the criteria for significant rootedness in Singapore may be given additional privileges, including the ability to establish a separate subsidiary to develop alternative business models.
Award of SRFB Privileges
Under the SRFB Framework announced in 2012 by Tharman Shanmugaratnam, Chairman of MAS, Qualifying Full Banks (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. The assessment of significant rootedness is made by MAS on the basis of 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 21 November 2019, said the regulator. SCBSL is the first QFB to qualify for SRFB privileges under the EUSFTA commitments. With effect from 3 August 2020, SCBSL will be able to operate up to 50 POBs.
Enhancement to the SRFB Framework
MAS will also enhance the SRFB Framework to recognise SRFBs with a significantly higher degree of rootedness.
Under the enhanced SRFB Framework, MAS 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 enhanced SRFB Framework will strengthen the ability of SRFBs to complement the local banks as anchors to Singapore’s financial system.
To determine if an SRFB substantially exceeds the baseline criteria, MAS will consider a range of additional attributes of rootedness in Singapore. These include:
- Full subsidiarisation of banking business operations in Singapore;
- Significant proportion of global key appointment holders and business heads based in Singapore;
- Firm commitment to Singapore's financial stability and development in the long term, such as – (i) Being a significant bank in Singapore by headcount, with a focus on developing the talent pipeline in Singapore, through creating jobs or participating in upskilling programmes; (ii) Having a Singaporean/ Singaporean group as a substantial shareholder; and (iii) Demonstrating strong commitment to Singapore’s economy and financial markets, such as if the bank is also an MAS Primary Dealer, leads and participates in key industry initiatives or associations, and is committed to develop new business lines and deepen existing business lines in Singapore.
SRFB privileges, including the award of the additional full bank licence, will continue to be offered only under Singapore’s FTAs that contain SRFB commitments.
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