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Banking Law in Singapore

Banking Law in Singapore

Updated on Friday 18th September 2015

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Banking-Law-in-SingaporeThe Banking Act in Singapore

The Banking Law is comprised in the Commercial Code in Singapore. Singapore has always tried to welcome both local and foreign investors wanting to set up financial institutions in the city-state. All banks and other financial institutions fall under the regulation and supervision of the Monetary Authority of Singapore. According to the Banking Law, all financial institutions in Singapore are required to apply for a banking license before starting operating.

For banking license requirements you can rely on our lawyers in Singapore.

The banking license in Singapore

The Monetary Authority issues three types of banking licenses for Singapore companies in the financial sector:

  • - the full banking license,
  • - the wholesale banking license,
  • - the offshore banking license.

Singapore banks may apply for full banking licenses. Foreign banks may also apply for a full banking license in Singapore, but they are subject to certain restrictions such as the number of branches they can open and the number of ATMs they can install.

Wholesale banks in Singapore are allowed to carry the same financial activities as the full banks but are not allowed to carry out Singapore dollar retail banking undertakings. Offshore banks will operate as branches of foreign companies in Singapore.

The Singapore Banking Act also allows the incorporation of merchant banks that provide corporate finance, mergers and acquisitions services and portfolio investment management services.

What are the requirements to open a bank in Singapore?

In order to set up a bank there are few criteria to be met according to the Banking Law in Singapore. Among these are:

  • - banks incorporated in Singapore must deposit a minimum share capital of 1,500 million S$,
  • - foreign banks establishing a subsidiary or branch office in Singapore must have a share capital of the equivalent of 200 million S$.

In order to open a subsidiary in Singapore, a foreign bank must deposit a minimum share capital of 100 million S$ upon registration.  Also, the Monetary Authority may also request Singapore banks to maintain a certain amount of capital, also known as risk-based capital requirements.

 For details about opening a financial institution please contact our Singapore law firm.

 

 

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