Banks eyeing fintechs find some rules clearer than others

Fintech companies are disrupting traditional financing and banks are eager not to be left behind, which is why tie-ups are on the rise


BANKS and financial-technology companies (fintechs) may snuggle up in the years ahead, but banks will not be getting away with doling out riskier loans from tie-ups with less-regulated start-ups.

Existing rules will apply to ensure that there is no room for capital arbitrage when a bank acquires a fintech that provides lending and funding to smaller firms, regulatory and banking sources told The Business Times; but other regulatory questions regarding fintechs may still need clearing up.

Banks are held to strict regulatory standards which require them to hold a proportionate amount of capital determined by the risk level of their assets such as loans, and by the capital ratio. The capital...


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