The Monetary Authority of Singapore (MAS) announced its plans to streamline the regulatory requirements for banks looking to invest in permissible non-financial businesses.
During the 44th Annual Dinner of The Association of Banks in Singapore, it was announced that MAS will refine the anti-commingling framework for banks in two key aspects.
Firstly, the central bank will make it more convenient for banks to conduct or invest in non-financial businesses that are related or complementary to their core financial businesses.
With this amendment, the banks will not be required to seek prior regulatory approval before acquiring stakes in such businesses. Instead, they will be requested to notify the central bank prior to entering such deals.
"MAS will continue to require banks to put in place appropriate risk management and governance arrangements to deal with the risks arising from these businesses," the central bank said in a statement released to the media.
However, MAS will cap such permissible non-financial businesses to 10% of the bank's capital funds to ensure that they focus on their core businesses.
The second key change in the framework will allow banks to engage in the operation of digital platforms. This will allow banks to expand their ability to give a fuller suite of services to retail customers.
Despite these changes, the banks will still be prohibited from venturing into certain businesses such as property development and the provision of hotel and resort facilities.
To recall, the anti-commingling framework was introduced in 2001 when the local banks had set up diverse non-banking businesses, particularly in property. It was a move to avoid problems arising from the conduct of non-financial businesses.
"Technological advancements have created opportunities for banks to provide customers with integrated financial and related non-financial services through digital platforms. The proposed measures by MAS will give banks more flexibility to serve the needs of their customers while ensuring they remain focused on their core financial businesses," MAS stated.
The central bank will be consulting on the operational details of the mentioned policy changes util the end of September this year.
