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30 JUL 2019

Banking Industry and Leading Banks of Singapore

TOPIC : Bank Account

These days, Singapore is among the best known global business centers. Its banking sector contributes to more than 10% of the nation’s Gross Domestic Product. Around 5% of Singapore’s manpower works in the financial sector, making it one of the most profitable sectors in the country.

A few of the many factors that boost the success of the banking industry are: 

·      A robust set of rules;

·      A conducive business ecosystem that attracts foreign entrepreneurs;

·      A superior infrastructure;

·      Capable human resources including both, regional as well as foreign personnel, forming an international skill pool.

The success of the banking industry in Singapore lies in its diversity that comes in the form of the variety of financial services it offers. Loans, deposits and investments are also part of its financial services.

All banks are governed by the Monetary Authority of Singapore.


 

Banking in Singapore - Highlights and Patterns

·         With many foreign banks coming up, Singapore has become a key player in the international banking landscape. Continuous competition among local banks led to the birth of unique financial products and a beneficial price regime. Coming together helps local banks grow regionally.

Six local banking groups merged into 3 (UOB, DBS, OCBC) resulting in better activities and capabilities. They became ‘single-window’ banks catering to every possible financial need.

·         Liberalization of banks in 1999 gave foreign banks full banking licenses and offshore banks, more freedom in SGD wholesale activities. The limit on foreign shareholding in local banks was withdrawn and restricted banks can carry out wholesale operations.

·         Steps taken by the Singapore government have made it a competitive investment center, by releasing approved bonds. A prospering Singapore Exchange has got many foreign companies to do business in the country.

·         Focusing on smarter corporate banking from consumer banking has broadened the scope of many popular banks of Singapore.

·         Singapore, like some financial offshore centers, has not signed the EU Tax Directive (2005). This directive requires the signatory to disclose some personal details about its overseas depositors/investors. Singapore keeps confidentiality of the interests of its clients at topmost priority.

High net-worth clients in Singapore get lots of sophisticated wealth management services such as tax/state management, asset protection, strategic orientation, credits, lifestyle/wealth advisory and others.

·         Focus on SMEs has won reliable business partners for Singapore banks. Small and mid-sized Singapore companies benefit from premium bespoke financial, insurance, investment and loan products, as well as management and trade services. The government offers SMEs with convenient schemes to expand and upgrade their financial operations.

·         Capital gain taxes from incomes earned abroad are not taxable in Singapore.



Types of Banks in Singapore

All Singapore banks can be classified into three groups, based on client-type:

·         Commercial banks (catering to corporates);

·         Consumer banks (catering to local as well as foreign average individuals);

·         Private banks (catering to high net-worth persons).

Based on localization and specialization, all Singapore-based banks can be categorized as follows:


Local Banks (6 banks in all, however, we focus on 3 flagship banking groups):

· United Overseas Bank (UOB) is one of Asia-Pacific’s key banks, operating since 1935 with more than 80 billion SGD assets in hand. It is also known as Singapore’s “Best Overall Fund Group”.

· Development Bank of Singapore (DBS) is Singapore’s largest consumer bank with more than 80 branches across the country and also a strong presence in Hong Kong. In 2008, DBS was ranked 14th (by The Banker) among 200 Asian banks.

· Oversea-Chinese Banking Corporation (OCBC), actively operating since 1912, has assets worth more than 190 billion SGD. In 2008, it was rated as the best regional bank by the Asia Risk End-User Research.


Overseas Banks (117 in all) can be categorized as:

· Full Banks – one-stop setups with every type of banking services possible for both corporate clients and individuals. Citibank, HSBC, Standard Chartered, BNP Paribas, and Maybank top the charts in this category.

· Offshore Banks – are branches/subsidiaries of Asian overseas banks that conduct banking operations via foreign currency units. SGD transactions happen via the domestic banking unit, but they are slightly in comparison with wholesale banks. A few offshore banks are Korea Development Bank, Bank of New Zealand, Bank of Taiwan, and so on.

· Wholesale Banks – are branches of foreign banks that offer all types of banking services, except SGD retail operations. A few such banks are National Australia Bank, Deutsche Bank, or ING Bank.

· Merchant Banks – manage corporate finances, do underwriting (subscription to bonds and shares for providing them to investors), strategic investments, the union of firms and other business/investment services. Merchant banks work with numerous Asian currency divisions. However, when working with a domestic banking unit, these banks are allowed to borrow or accept deposits only from banks, financial entities or corporates run by shareholders. Instances of these types of banks are Barclays Merchant Bank Singapore Ltd or Credit Suisse Singapore Ltd.

· Financial Companies are licensed institutions allowed to give or provide loans to purchase vehicles or property. They have their limitations when it comes to receiving deposits and are not permitted to extend loans of more than 5k SGD without security, or transact in foreign exchange, valuable metals, or stake in foreign currency (except for companies with paid-up capital exceeding 10 million SGD). There are only 3 financial companies in SG: Singapura Finance Ltd, Hong Leong Finance Limited, and Sing Investments and Finance Limited.


Singapore Bank environment, Singapore Foreign Bank, Singapore bank options, Singapore local bank


Bank Statute

The banking sector in Singapore is administered by just one authority – the Monetary Authority of Singapore – frames the island-estate’s financial policy, controls banks/financial institutions and releases domestic currency – the Singaporean Dollar. Appropriate acts, general law and equity rules regulate the banking sector:

· The Banking Act is the major legal instrument that lays out the country’s banking principles and the banking operations that are permissible (non-financial activities are banned since 2001);

· Securities and Futures Act

· Rulings against money laundering

· Financial Advisors Act



Foreign Company Bank Account and Associated Services

· Recently incorporated foreign companies can open bank accounts and easily transfer money between countries.

· Several Singapore banks require the presence of the new company’s directors (or other empowered signatories) for bank account paperwork. At times, if the bank has a branch in the country where the director resides, then there are provisions to accept documents in this foreign branch. However, physical presence quickens the process.

· SGD account fees differ from bank to bank (from 0 SGD in Standard Chartered Bank or OCBC to 7k SGD for some kinds of bank account services in HSBC). The fee is also based on the company’s legal pattern and its line of business.

· The account opening balance differs from bank to bank (30k SGD/30k USD in Standard Chartered or 300k SGD/100k USD in HSBC).

· All Singapore banks do not provide ATM cards (for instance, HSBC does, while Standard Chartered and Citibank don’t).


· All banks provide Cheque books in SGD. Precise knowledge about USD cheque books, from the respective bank is essential.

· For credit cards, banks usually have tailor-made solutions for every corporate entity, for both, domestic and foreign currency. For example, Standard Chartered and OCBC only provide debit cards; Citibank, DBS, UOB, or HSBC also provide credit cards (for local and foreign currency) though conditions apply.

· Every bank provides condition-based Internet banking with both, local and foreign payments.

· While providing business loans to companies, banks take into account the company’s background, headcount and capital stock among others.

· Essential documents to be submitted are:

  • Duly filled forms for opening a corporate bank account, signed by directors/signatories;
  • Resolution delivered to the board of directors that authorizes the opening of such account;
  • Attested copy of the aforementioned resolution (some banks require their form to be signed);
  • Attested copy of the certificate of incorporation (signed by the director and the secretary);
  • Attested copy of the company’s business description (from ACRA) – signed by the director and the secretary;
  • Attested copy of the MAA signed by the director and the secretary;
  • Attested copies of passports/Singapore ICs of the directors/signatories.



Conclusion

Singapore is a happening market that makes it one of the best in the world, for banks to build their brand and to broaden their scope.

Government backing and measures have attracted many foreign banks to have their branches in Singapore.

The island-estate’s geography is perfect for banks to connect with Asia’s most lucrative markets. Thus, Singapore is called a banking hub.

If this article makes you ready and willing to set up a business in Singapore, contact us to guide you right through your banking needs with services you can trust and quality that never disappoints.

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Fintech Guidelines in Singapore: Regulations, Compliance and Sandbox

For fintech companies to get to work in Singapore, it important to be in line with the financial services-based rules, along with Singapore’s corporate laws. This article presents an outline of the regulations, compliance issues and sandbox guidelines, directly related to Fintech companies in Singapore. Fintech Regulations The ecosystem in Singapore provides all the support to businesses. The main controller for the majority of fintech enterprises is the MAS. Fintech businesses may come under the ruling of one or more of the following statutory provisions: ·         Commodity Trading Act ·         Moneylenders Act ·         Trust Companies Act ·         Insurance Act ·         Securities and Futures Act ·         Finance Companies Act ·         Banking Act; ·         Financial Advisers Act; ·         Companies Act; ·         Business Trusts Act; ·         Payment Services Act (PSA) substitutes the Payment Systems (Oversight) Act and the Money-Changing and Remittance Businesses Act The new PSA aims to create provisions for a better-suited atmosphere for innovation in financial settlements and also ensure the reduction of risks throughout the payments value chain. Controlled financial settlements comprise cash transfers, issue of digital money and payment tokens. Key Compliance Issues Largely, Fintech entities must think through these key regulatory compliance issues: ·         Consequences of financing (for instance, venture capital investments transformed into Fintech entities). ·         Copyright issues (for instance, administration and protection of intellectual property). ·         Financial regulatory and compliance (for instance, the kind of license required from the concerned agency or licensing reliefs that apply to a Fintech product or service). ·         Data security (for instance, the conditions enforced on Fintech enterprises, concerning personal client information that they deal with. Additionally, Singapore also has a general data protection scheme, framed by the Personal Data Protection Act 2012). ·         Consumer/technology agreements (for instance, software licensing contracts or terms of use of the Fintech product or service that cover matters of consumer protection). Also, the Cybersecurity Act 2018, is aimed at governing systems that provide basic services in Singapore. The MAS Fintech Regulatory Sandbox is a distinctive licensing system designed for Fintech entities. For a Fintech product or service to function in the Regulatory Sandbox, the MAS supplies the required regulatory support by reducing specific legal and regulatory necessities for the period of the Regulatory Sandbox. A Fintech company that applies for entry into the Regulatory Sandbox, must know about its lack of compliance with specific statutory and legal provisions while presenting the Regulatory Sandbox application. It must ensure that a plan exists for fulfilling these conditions. By and large, the Regulatory Sandbox will cease operations, if the Fintech company lacks compliance with the concerned statutory and legal standards by the close of the Regulatory Sandbox timeline.   Fintech Regulatory Sandbox Guiding Principles To convert Singapore into a smart financial center, the Monetary Authority of Singapore (MAS), lately came out with the Fintech Regulatory Sandbox Guidelines. Earlier, a consultation paper was published by MAS. This paper was to simplify the legal provisions required by Fintech companies while testing innovative financial products and services regulated by the MAS. Based on the public discussion, the MAS has issued the final legal set of rules. These rules ease governing and legal obligations due to Fintech participants wanting to test and enforce innovative financial services in Singapore. The Regulatory Sandbox As explained by Ms Jacqueline Loh, the Deputy Managing Director of MAS, “The regulatory sandbox offers a favorable atmosphere for supervisory requirements to be business-friendly, enabling them to test budding innovations within the legal provisions.” This method is advantageous because FIs and startups are not required to surrender up-and-coming innovations just because they are not aware of its compliance with the statutory and legal criteria. The MAS’s directives list the main steps right from applying for the sandbox till its operation. Easing Regulatory Criteria According to the MAS, it will ease the legal criteria for applicants who succeed to the Sandbox. The directives underline the regulatory requirements that MAS may ease. These comprise: 1.      Creditworthiness 2.      Fund credibility and capital sufficiency; 3.      Cash equilibrium. 4.      License Fee; 5.      Asset maintenance obligation; 6.      Board constitution; Main Stages of the Sandbox 1.      Application Stage The applicant presents the sandbox application to the MAS that checks the application and lets the applicant know the decision within 21 days. 2.      Evaluation Stage If the applicant is practically right for the sandbox, the MAS will evaluate the application. After assessing it, the MAS will advise in writing to the applicant, to go ahead with the sandbox, or drop the idea. 3.      Experimentation Stage After approval of the application, the sandbox is sent for the experiment, where the sandbox entity should apprise its customers about the financial service it operates sandbox and also about the corresponding risks. The entity must get a confirmation from the customers that they are clear about all risks. Evaluation Criteria The evaluation criteria in the guidelines to be filled by the applicant are: 1.      The projected financial facilities use innovative technology, a rising technology or any prevailing technology differently; 2.      The projected financial service focuses on specific matters or benefits consumers or the domain; 3.      Once an applicant leaves sandbox, the intention is to expand the proposed financial service in Singapore; 4.      The experiments and intended results of the sandbox tests must be well-defined, and the sandbox entity must update on the developments to the MAS consistently; 5.      The corresponding limitations should be precisely stated; 6.      The applicant must identify and eliminate the serious threats owing to the projected financial service 7.      A satisfactory exit and changeover plan must be clear, in case the projected financial service is to be stopped. Promising Clarity, Flexibility & Transparency As per the MAS statement, the regulatory sandbox instructions will accomplish: 1.      Better Transparency – The instructions cover examples and details specifying MAS’ expectations, like the criteria for accessing entry into the sandbox; 2.      Increased Flexibility – The instructions cover higher flexibility and making the evaluation criteria easy for businesses keen on entering the sandbox. It also facilitates modifications while experimenting. Conclusion Despite the fact that Singapore lacks fintech-focused regulations, fintech firms are required to comply with the running laws that govern the financial services industry. These comprise ensuring the appropriate licensing, keeping personal data requirements updated, according to the Personal Data Protection Act and complying with AML/CFT notices. It is important to know that fintech is always going through innovations. Singapore lawmakers are always coming up with new ways to secure firms and consumers. Aspirants must always be updated with the latest compliance regulations as this new industry is always on the move. We would love if you get in touch with us to know everything about the Fintech domain in Singapore.

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Applying for Singapore Entrepreneur Pass

Are you a foreigner looking to relocate to Singapore to start and run a business? Then the Singapore Entrepreneur Pass or EntrePass is just the thing for you. To be eligible to apply for this work visa, the entrepreneur who intends to come to Singapore to establish a company, must display a paid-up capital of at least S$50,000. This helps entrepreneurs who have a more successful professional record, as compared to documented qualifications. The EntrePass works perfectly for foreign businesspersons who fall short of academic certifications or are not eligible according to the Employment Pass scheme, but have proved their business expertise through booming professional experience. In practice, applying for an EntrePass used to be more difficult than that for an Employment Pass (EP), due to the paid-up capital requirement of S$50,000. However, this requirement has now been removed to attract more qualified applicants worldwide. What Makes You Eligible and Ineligible for the EntrePass? A foreign entrepreneur can apply for the EntrePass if the following conditions are met: 1.      The candidate has or aims to launch a private limited company, registered with the Accounting and Corporate Regulatory Authority (ACRA) in Singapore. In case the company has already been registered, it should be less than or equal to 6 months old on the date of application. 2.      The applicant must be a minimum 30% shareholder in the capital of the company.Additional Provisions The applicant is required to meet a minimum of one of the listed requirements, either in the capacity of an innovator, an entrepreneur, or an investor: Innovator ·         The enterprise should be a holder or an intellectual property asset. ·         The company should have had participated in joint research with A*STAR or a university. ·         The company must possess excellent technical or domain expertise that is connected to the intended business. Entrepreneur ·         The financial support of the company must come from a Government-recognized VC or business angel. ·         The company should have active involvement in a Government-supported incubator. ·         The candidate must have a proven track record or network and bright business history of having launched very lucrative enterprises. Investor ·         The candidate must have a good previous experience of business investments and should be keen on expanding a new company or already existent one in Singapore. You can learn more about these requirements here. Businesses Ineligible for the EntrePass Cafés, cafeterias, massage parlors, pubs, night clubs, job placement services and others, do not qualify for the EntrePass. A full account of the businesses that do not qualify for the pass is available on the MOM website. The Application Procedure How to Apply? An applicant or a representative of the applicant is eligible to submit an application for the EntrePass. The MOM lays down the steps listed below to apply for the EntrePass: 1.      An applicant must attach the EntrePass application form with necessary documents and submit the pack. 2.      Once the application has been approved, as a policy, the MOM will issue an approval letter. The applicant is required to register the company (in case not already done so) with ACRA within a month of receiving the letter. 3.      As a rule, the EntrePass should be issued within 6 months of the approval letter. 4.      Once the EntrePass has been issued, the fingerprint and photo registration of the candidate is required. 5.      MOM will send the card to the address indicated in the application. Essential Paperwork The following documents must be attached and submitted along with the application for the EntrePass: 1.      Copy of the individual information page of applicant’s passport; 2.      Previous service testimonies in English; and 3.      A plan of action that mentions the enterpriser’s business strategy, market research, market plan, products or services in the offering, etc. Bear in mind that at the time of applying, if the business is already registered with ACRA, the following must be submitted: 1.      A copy of the company’s recent profile (as can be seen on the ACRA website) How to Renew, Cancel and Replace the EntrePass? EntrePass Renewal The EntrePass that is issued for the first time has a validity of 1+1 years. This means that one year after its issue, the EntrePass must be renewed. If all eligibility requirements for renewal are fulfilled, the validity is extended for one additional year. From then on, all the EntrePass renewals that follow will have a 2-year validity. An EntrePass holder can put forward an application to get his pass renewed, 3 months before it expires. Among the renewal requirements is that the EntrePass holder must retain the initial business plan submitted to the Ministry when applying for the first time. For renewal of the pass, the holder needs to make sure that his business creates employment in Singapore. For more information on the renewal of an EntrePass click here. Cancelling the EntrePass In case an EntrePass needs to be cancelled, it can be done by the pass holder, a company agent or an employment agent. The cancellation should happen and the pass must be returned in a week’s duration after the closure of the business. Replacement of the EntrePass In case of theft, loss or damage to EntrePass, the holder of the pass, or an agent appointed by the company, or an employment agent can submit an application to have the pass replaced, not later than 7 days since the loss. Additionally, in case an EntrePass holder’s card is stolen, the incident must be reported to the police. Notification of Changes If any one or more of the following changes are to be done to an EntrePass, the pass holder must notify the MOM: 1.      Line of business; 2.      Candidate’s personal information, home address, office address; 3.      Salary; 4.      Company name and account info and 5.      Line of work To know more about notifying these changes and the related timeframes visit the MOM website. Family Onboard There are two passes that enable EntrePass holders to call their families to Singapore and be with them; the Dependant’s Pass orthe Long Term Visit Pass. The eligible family members comprise: 1.      Spouse. 2.      Common-law spouse 3.      Unmarried and lawfully adopted children, below 21 years of age 4.      Unmarried differently-abled children, above 21 years of age 5.      Unmarried step-children below 21 years of age 6.      Parents EntrePass holders can get their family members on board in Singapore, once they have successfully renewed their passes. In other words, EntrePass holders are not allowed to get their family members after they apply for the pass the first time. Also, to get a family member to Singapore the EntrePass holder must ensure that he or she meets the total business expense and employment generation conditions as ruled by the MOM. Conclusion An EntrePass is a necessity for a foreign entrepreneur who intends to set up and operate a business in Singapore. Do not forget that the MOM carefully scans all applications, as well as the business plans that are submitted along with them, to check if the submissions conform to the requirements of the Ministry. With our help, your chances of getting the Singapore EntrePass are much higher and free of troubles. Contact us today so that we can evaluate your eligibility and come up with ways that increase your hit rate. This is your chance to live and do business in Asia’s most desired city.

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Reinsurance Market in Singapore

About Reinsurance Reinsurance is a contract under which a reinsurer agrees to indemnify a ceding company against all or part of the primary insurance risks underwritten by the ceding company under one or more insurance contracts. Market Trends Singapore is not only Asia’s largest international financial center but also one of Asia’s largest international reinsurance centers. The Singapore insurance market remains very competitive. As of the end of 2016, the market had gross premiums total receipt of about over S$3.97 billion and a total asset worth of about S$11.14 billion. Statistics collected over the seven-year period between 2010 and 2016 indicate a growing market. Total gross premiums and retention ratios have increased year on year, indicating good growth prospects for the market as a whole. In particular, the Singaporean general insurance sector registered a compound annual growth rate of 23.1% from 2010 to 2016 in respect of gross written premiums. Since 2011, statistics show that the offshore insurance market has maintained its retention ratio at about 60% and increased its total assets up to S$22.2 billion. The Singapore reinsurance market remains extremely competitive. Total gross premiums for the reinsurance industry were S$4.9 billion in 2016 and retention ratio has been 69.1%.   Regulatory Framework The Insurance Act (Cap 142) governs insurance and reinsurance activities in Singapore. Regulatory Bodies Insurance and reinsurance activities are regulated by the MAS (Monetary Authority of Singapore), established by the Monetary Authority of Singapore Act (Cap 186). MAS is responsible for the licensing, authorization and supervision of insurance and reinsurance activities.   Authorized Reinsurer Overseas insurers may apply for authorization to carry on life and/or general reinsurance business in Singapore. Authorized Reinsurers: -       Do not have a physical presence in Singapore and provide insurance services from overseas to persons in Singapore. -       Are subject to limited oversight by MAS compared to licensed insurers : Not required to set up and maintain separate insurance funds for policies taken out by persons in Singapore : No need to comply with solvency margin requirements Admission Criteria MAS assesses applications for authorization of reinsurers based on these criteria: -       Domestic and international rankings of the applicant by factors such as premiums and assets -       Past and present credit ratings by international rating agencies (i.e., Standard and Poor's, A.M Best, Moody's and Fitch) -       Track record, financial soundness and reputation of the applicant MAS will consult the applicant's home supervisory authority to check the applicant’s compliance with its home regulations. -       Risk management systems and processes aligning with the size and complexity of the business -       Fitness and propriety of the applicant and all persons having control of the applicant Documents To Be Submitted Along With The Application Form 1) A certified true copy of the license issued by the insurance supervisory authority in the country in which the company is carrying on insurance business 2) A copy of the annual report and financial statements of both the applicant and its ultimate parent company for each of the last three years Processing Time It will take approximately 6 to 8 weeks after submission of complete application to process and approve an application. As each application will be evaluated on a case-by-case basis, processing time depends on the circumstances of each application and the completeness of the information submitted. Annual Fee Every authorized reinsurer shall pay an annual fee of S$10,000 to the Authority before 1st January of each year. License For Reinsurer Applicants need a license to carry on life and/or general reinsurance business in Singapore. Admission Criteria MAS assesses applications for life and/or general reinsurance licenses based on these criteria: -       Same as admission criteria for authorized reinsurer -       Well-developed business strategy and detailed plans reflecting the risk profile of the business Documents To Be Submitted Along With The Application Form 1) A certified true copy of the license issued by the insurance supervisory authority in the country in which the company is carrying on insurance business 2) A certified true copy of the letter from the insurance supervisory authority in the country granting the company to establish insurance operations in Singapore, if such approval is required. (If approval is not required, a statement to this effect should be provided.) 3) A copy of the annual report and financial statements of both the applicant and its ultimate parent company for each of the last three years 4) A copy of the feasibility study conducted in respect of the proposed Singapore operations (including financial projections for the proposed Singapore operations). Taxation Of Insurance And Reinsurance Providers Under the Income Tax Act, all companies are generally taxed at the rate of 17% on their chargeable income. However, some insurers may be subject to different tax rates depending on the type of insurance business carried on.   ∙ Life Insurance Business Insurers carrying on life insurance business are subject to a tax rate of 10% on life insurance surplus of any life insurance fund apportioned to policyholders for each year of assessment.   ∙ Marine Hull and Liability Insurance/Reinsurance Business Tax is payable at the rate of 5% on chargeable income derived by an approved marine hull and liability insurer for each year of assessment.   ∙ Offshore General Insurance/Reinsurance Business An approved insurer carrying on offshore life insurance business and insuring/reinsuring offshore risks will be taxed at the rate of 10% on chargeable income for each year of assessment.   ∙ Captive Insurers Captive insurers are exempt from tax on any underwriting income derived from insuring offshore risks.   Singapore Insurance Market Trends     Source: MAS (Monetary Authority of Singapore) Life insurance valuation results for the year ended 31st December 2018 -       Professional Reinsurer Source: MAS (Monetary Authority of Singapore) If you have any questions about Singapore company incorporation and investment in Singapore, please contact us via Contact Us page. We will provide you with a variety of solutions for efficient business operations as well as practical advice on legal requirements.

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