Singapore to allow virtual banks as part of move to open up market (updated)

Boc Hong Kong Holdings

01/07/2019 02:18

(Repeats story published late on Friday)
    * Digital bank licences mark liberalisation in sector
    * Singapore to initially offer two digital full bank
licences
    * Asia's non-banking firms keen to challenge traditional
banks
    * Hong Kong began issuing licences earlier this year

    By Anshuman Daga
    SINGAPORE, June 28 (Reuters) - Singapore's central bank
plans to issue up to five digital bank licences to suitable
applicants, in a move that could deliver the biggest shake-up in
two decades in a market dominated by local banks.
    "The new digital bank licences mark the next chapter in
Singapore's banking liberalisation journey," said Tharman
Shanmugaratnam, senior minister and chairman of the Monetary
Authority of Singapore (MAS).
    "We welcome firms with innovative value propositions to
apply for the digital bank licences, even if they have not yet
established a track record in banking," Shanmugaratnam said at
an annual event of the Association of Banks in Singapore.
    Asia's non-banking firms are keen to challenge traditional
banks by leveraging their technology and their user databases to
offer banking services to retail customers and small businesses.
 urn:newsml:reuters.com:*:nL3N21R10B
    Singapore's banking market is dominated by DBS Group
Holdings Ltd  DBSM.SI , Oversea-Chinese Banking Corp  OCBC.SI 
and United Overseas Bank Ltd  UOBH.SI .
    Earlier this month, Reuters cited sources as saying that
ride-hailing company Grab is close to hiring a consultancy to
advise it on its banking potential and is gearing up to apply
for a digital-only bank licence in Singapore.  urn:newsml:reuters.com:*:nL4N23I1MK
    Global financial technology players are among other groups
expected to seek licences in Singapore, with some of them
looking to form joint ventures, Reuters reported.
    "The far-reaching effects of digitalisation are stimulating
a fundamental re-think of the role of banks, in most advanced
financial centres," Shanmugaratnam said.
    "We are starting with two digital full bank licences, so as
not to fragment Singapore's small domestic retail banking
market," he said.
    MAS expects to invite applications in August.
    Shanmugaratnam said a digital full bank will start as a
restricted digital bank to build up its business model and
internal processes, and gradually progress to become a full
functioning full bank.
    Hong Kong, Singapore's fierce financial centre rival, began
issuing licences earlier this year.  urn:newsml:reuters.com:*:nL3N22J302
    In Hong Kong, affiliates of Alibaba Group Holding Ltd
 BABA.N  and Xiaomi Corp  1810.HK , and consortia led by
Standard Chartered PLC  STAN.L  and BOC Hong Kong Holdings Ltd
 2388.HK  were among those who won the digital-only banking
licences.  urn:newsml:reuters.com:*:nL3N22L30U
    The MAS said in a statement that it will issue up to two
full digital bank licences to companies headquartered in
Singapore and controlled by Singaporeans.
    Foreign firms are eligible for these licences if they form a
joint venture with a Singapore company, and the venture meets
the headquarter and control requirements.
    The central bank will also issue up to three digital
wholesale bank licences which will be open to both local and
foreign players.
    Digital wholesale banks will not be allowed to take
Singapore deposits from individuals, except for fixed deposits
of at least S$250,000 and will be permitted to maintain deposit
accounts for corporate and small and medium enterprises.

 (Reporting by Anshuman Daga; Editing by Jan Harvey and Louise
Heavens)
 ((anshuman.daga@tr.com; +65 64035676; Reuters Messaging:
anshuman.daga.thomsonreuters.com@reuters.net))