MAS Enhances its Significantly Rooted Foreign Bank Framework

Singapore, 3 August 2020…The Monetary Authority of Singapore (MAS) announced today that it will award Significantly Rooted Foreign Bank (SRFB) privileges to Standard Chartered Bank (Singapore) Limited (SCBSL), allowing it to operate additional places of business (POBs). SCBSL is the first bank to qualify as an SRFB.

2   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

3   Under the SRFB Framework announced in 2012 by Chairman, MAS, Mr Tharman Shanmugaratnam,  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 [1] . The assessment of significant rootedness is made by MAS on the basis of a range of quantitative and qualitative attributes.

4   The first FTA that includes SRFB commitments, the EU-Singapore Free Trade Agreement (EUSFTA), entered into force on 21 November 2019. 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

5   MAS will also enhance the SRFB Framework to recognise SRFBs with a significantly higher degree of rootedness.

6   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.

7   To determine if an SRFB substantially exceeds the baseline criteria, MAS will consider a range of additional attributes of rootedness in Singapore. These include:

(a) full subsidiarisation of banking business operations in Singapore;
(b) significant proportion of global key appointment holders and business heads based in Singapore;
(c) 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 [2] , 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.

8   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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Information on the SRFB Framework:
Under the SRFB Framework announced in 2012, Qualifying Full Banks (QFBs) that have become significantly rooted in Singapore are allowed to establish an additional 25 places of businesses (POBs), of which up to 10 may be branches. These QFBs will be able to operate up to 50 POBs in Singapore.

SRFBs are only awarded as part of an overall package negotiated under free trade agreements (FTAs) with these QFBs’ home countries. To determine if a QFB is significantly rooted, MAS considers a range of qualitative and quantitative attributes, including the bank’s alignment of economic interests with Singapore, local business presence, and commitment to Singapore’s financial stability and development in the long term. Please refer to the MAS website for more information on the SRFB Framework.

Information on MAS’ existing regulatory framework for establishing qualifying subsidiaries:
Since 2000, Singapore-incorporated banking groups are permitted to establish qualifying subsidiaries to operate new or alternative business models, with a lower paid-up capital of S$100 million. Such qualifying subsidiaries may also be established in alliance with joint-venture partners, so long as the Singapore-incorporated bank retains control over the venture. Please refer to the MAS website for more information.