• Liberalisation of the domestic banking market.
• Local banks strengthened their regional presence through mergers and acquisitions.
• Expansion of foreign banks, some of which made Singapore a regional or even global platform for important banking services, which in turn led to increased competitiveness.
• Increased competition spurred the development of innovative products and more competitive pricing models.
• Provision of sophisticated banking services like corporate and investment banking activities, apart from traditional lending and deposit-taking functions.
• Strict banking secrecy laws, tax friendly policies and a suite of wealth management services created a private banking boom. Swiss giants Credit Suisse Group and UBS AG have expanded private-banking operations in Singapore to cater to new demand from Asians and Europeans.
• Recognising and catering to the needs of Small and Medium Enterprises who comprise a sizable banking market in Singapore.

This guide provides an overview of the banking industry in Singapore focusing on the key trends, the major domestic and international players and the services they offer, the role of the Monetary Authority of Singapore (MAS) and banking regulations that govern the industry today.

Singapore’s Banking Industry Trends

Liberalisation of banking sector

In May 1999, MAS launched a five-year liberalisation package to strengthen the banking system and to improve Singapore’s reputation as an international financial centre. The measures included issuing a new category of full banking licenses known as Qualifying Full Bank (QFB) licenses to foreign banks, increasing the number of restricted banks, and giving offshore banks greater flexibility in Singapore Dollar wholesale business. MAS also set out to improve corporate governance practices. Furthermore, the 40 percent foreign shareholding limit in local banks was lifted.

The second phase of liberalisation began in June 2001 during which the restricted banks were re-classified as wholesale banks to improve competitiveness in retail banking. QFBs were given more privileges (permission to establish more locations, provide debt and special account services). Qualifying offshore banks (QOBs) were given priority to upgrade themselves to wholesale banking status. Consolidation of local banks was seen as a positive, stabilising move as these banks play a pivotal role in providing resilience and stability to the banking system, especially during a financial crisis.

Growth of private banking industry

Singapore has capitalised on the growing number of high net worth individuals in Asia and other regions like Europe and the Middle East, emerging as a leading private banking destination for international investors. Singapore has earned the sobriquet “Switzerland of Asia”, attributable to

• Strict banking secrecy laws – Section 47 of the Banking Act states that customer information shall not, in any way, be disclosed by a bank or any of its officers, to any other person except as expressly provided in the Banking Act.
• Non-recognition of the 2005 European Tax Directive – Singapore is one of the few remaining offshore centres that has not signed up to the EU’s Savings Tax Directive, whose country members can exchange private information relating to individuals who bank and invest in these countries.
• Generous tax incentives – Capital gains and interest income from outside Singapore are not taxed here.

Private banks such as UBS, Credit Suisse, Citigroup and Standard Chartered to name a few, provide

• global wealth management services
• wealth and lifestyle advisory services
• investment strategies
• tax and estate planning
• asset protection
• credit services