Regulator proposes changes to Singapore’s banking law

According to the proposed amendments (65-page / 503 KB PDF) to the Banking Act (BA), MAS could require any bank that is incorporated outside Singapore “which meets certain specified criteria, to be incorporated in Singapore, for the purpose of enhancing depositor protection”.

MAS said that it also plans to introduce “a safe harbour provision protecting external auditors from liability arising from disclosure, in good faith, of confidential information provided to MAS”.

In addition, MAS has set out proposals giving the authority the right to penalise auditors for failure to discharge their statutory duties as set out in the BA. MAS would also be able to direct a bank to remove external auditors “who have not satisfactorily performed their statutory duties”.

MAS said it will also “clarify the definitions of minimum paid-up capital and minimum capital funds for Singapore-incorporated banks, such that they can be met with Singapore dollar or any currency approved by MAS, and only in the form of ordinary shares, which have the greatest loss absorbing capacity”.

Under the changes, Singapore-incorporated banks would be required to immediately notify MAS “as soon as they become aware of persons who have become substantial shareholders and controllers without seeking the prior approval of the minister-in-charge of MAS”. MAS also plans to “formalise the requirement for Singapore-incorporated banks to notify MAS as soon as they become aware of any information that negatively affects the suitability of these persons to be their substantial shareholders and controllers”.

The amendments proposed by MAS follow feedback received to a consultation paper on a review of the BA published in November 2013 (11-page / 536 KB PDF).