Cut in Requirement for Wholesale Bank

Nov 8, 2007

CUT IN CAPITAL REQUIREMENT:
MAS mulls new rule for wholesale banks

WHOLESALE banks looking to set up a local unit in Singapore may soon need to put up just $15 million to meet the minimum paid-up capital requirement. This is a drastic drop from the $1.5 billion minimum capital that locally-incorporated full banks in Singapore currently have to hold.

The Monetary Authority of Singapore (MAS) yesterday issued a consultation paper that proposed a reduction in the minimum capital requirement for locally-incorporated wholesale banks.

Such banks are restricted from accepting deposits from retail customers and only need to have a paid-up capital of at least $15 million. The requirement is higher at $100 million for banks with branches or subsidiaries outside Singapore.

The MAS said it has received feedback 'that there is some commercial interest in incorporating wholesale bank subsidies in Singapore, but they will not be able to meet the $1.5 billion minimum paid-up capital requirement for local incorporation'.

There are currently 40 wholesale banks operating in Singapore. Banks operating as branches will have the option of incorporating locally under the new rules.