StanChart closer to building digital-only bank in Singapore

Singapore

STANDARD Chartered Singapore was awarded enhanced "Significantly Rooted Foreign Bank" (SRFB) privileges by the Monetary Authority of Singapore (MAS) on Thursday, paving the way for it to set up a digital-only bank.

The enhanced SRFB privileges allow StanChart to secure an additional full bank licence to establish a subsidiary to operate new or alternative business models such as a digital-led bank with ecosystem partners.

Through this path, StanChart will benefit from a lower minimum paid up capital of S$100 million for the unit that operates the digital-only bank, compared with the eventual requirement of S$1.5 billion for a digital full bank under the latest digital bank requirements. This is an option that Singapore's three banks - DBS, OCBC and UOB - already have.

StanChart Singapore was in August named the country's first SRFB.

If this digital bank comes to pass, StanChart will join the four digital banks here that were recently awarded licences by MAS. Consumer Internet company Sea and a Grab-Singtel consortium nabbed the two digital full-bank licences, while the two digital wholesale bank licences were clinched by China's Ant Group and a Greenland Financial-led consortium.

In response to queries from The Business Times, an MAS spokesperson said the financial regulator recognises StanChart for "substantially exceeding" the SRFB baseline criteria.

It is "deeply anchored" in Singapore and a "significant contributor" to its financial stability and growth, said the spokesperson.

The enhanced privilege will enable the bank to further grow its presence in Singapore, it added.

In a statement, Patrick Lee, CEO of StanChart Singapore, said: "We are excited about the opportunity to secure an additional full bank licence under the enhanced SRFB framework, and are actively developing and exploring the best digital models for consumers in Singapore."

The bank earlier confirmed that it was mulling over its decision whether to build a digital bank here, similar to its digital bank MOX in Hong Kong.

In addition, with the signing of the UK-Singapore Free Trade Agreement (FTA) on Thursday, StanChart will also be entitled to additional places of business (POBs) on top of the 50 which it is entitled to as an SRFB. As at August, it had 18 POBs.

Bill Winters, group chief executive, StanChart, noted the "long and extensive" UK-Singapore bilateral relationship, and said that the signing of the UK-Singapore FTA enables continuity from the EU-Singapore Free Trade Agreement (EUSFTA).

"Singapore is a core market for us, and it is a significant honour to be granted enhanced SRFB privileges," he said in a statement. "We have invested and grown in Singapore to be the global business and operations hub that we are today, and we look forward to playing our part in developing the country's banking landscape."

StanChart is the first domestic systemically important bank to incorporate all its businesses in Singapore, and the largest foreign banking subsidiary with a US$80 billion balance sheet backed by US$6 billion of capital. Singapore is its second largest market after Hong Kong.

The SRFB framework was announced in 2012, with SRFBs awarded only as part of an overall package negotiated under FTAs with qualifying full banks' (QFBs) home countries, and to QFBs that are "significantly rooted" here.

The first FTA that includes SRFB commitments, the EUSFTA, entered into force on Nov 21, 2019. StanChart Singapore is also the first QFB to qualify for SRFB privileges under the EUSFTA commitments.