By Carolyn A. Betts, Esq.
Banks and finance companies licensed in Singapore are supervised by the Monetary Authority of Singapore (“MAS”). MAS is charged with ensuring the stability of the banking system in Singapore and requiring financial institutions to have sound risk management systems and adequate internal controls.
The Monetary Authority of Singapore lists six banks incorporated in Singapore. Three of these banks are subsidiary to or owned by one of the other three listed banks, Development Bank of Singapore (“DBS”), Oversea-Chinese Banking Corporation (“OCBC”), and United Overseas Bank Ltd (“UOB”). The three licensed finance companies in Singapore are Hong Leong Finance Limited, Sing Investments & Finance Limited and Singapura Finance Ltd.
The difference between banks and financing companies is that full banks are licensed to transact the whole range of banking business, including deposit taking, the provision of check services and lending. Finance companies focus on providing small-scale financing, including installment credit for motor vehicles. Both full banks and finance companies are permitted to take Singapore dollar retail deposits.
Singapore Bank Rankings and Ratings for Safety and Soundness
The three major Singaporean banks were each ranked in the top 50 safest banks globally according to Global Finance magazine as of August 25, 2009. Their Global Finance rankings, ratings and assets (which appear to be stated in US dollars) are as follows:
The rankings were based on the banks’ Moody’s, Standard & Poor’s, and Fitch long-term credit ratings and on their total assets.
Deposit Insurance
The Singapore Deposit Insurance Corporation (“SDIC”) administers the deposit insurance “scheme” for Singaporean “full” banks and financial institutions, all of which are members of the SDIC unless exempted by the MAS. Wholesale and offshore banks are required to be members only if they are full banks. The SDIC is similar to the FDIC in that insurance payments are financed through the membership fees of member institutions. The SDIC website explains that it is a company “limited by guarantee” under the Companies Act but created by an act of Parliament that designates it as the Deposit Insurance Agency under the Deposit Insurance Act. The board of SDIC is accountable to the Minister in charge of MAS. Development Bank of Singapore, Oversea-Chinese Bank and United Overseas Bank are all member banks.
Eligible deposits in member institutions are insured up to SG$20,000 (US$13,860 as of September 2, 2009) per member institution. Singapore dollar-denominated savings accounts, fixed deposits and current accounts held by eligible customers are covered by the Deposit Insurance Scheme. Foreign currency deposits, structured deposits and investment products like unit trusts are not covered. Account opening documents and account statements are required to indicate which products are covered by deposit insurance. To be eligible for insurance, an account must be held by an individual or charity.
Funds held in bank deposits under the Central Provident Fund Investment Scheme are separately insured up to SG$20,000. The “CPF” is a compulsory social security savings plan in Singapore established in 1955 that is administered by a CPF Board under the Ministry of Manpower.
Nonresident Accountholders
Each of the major Singapore banks requires that the client present him/herself with proper identification at a branch office to open an account. All three have offices in Manhattan. However, interested parties will need to check with each bank as to whether they will forward account application documents.
Other Solari Reports on Banking Systems