Banks and Services
With its strategic location and well-developed infrastructure, Singapore is a center for trade and financial services for the Asian region. Financial services are a key source of growth since the 1970s and the government constantly provides incentives for the development of Singapore banks and services.
Commercial banks in Singapore are licensed under and governed by the Banking Act and may undertake universal banking. The license for commercial banking, permits deposit taking, the provision of cheque services and lending and any other business which is regulated or authorised by Monetary Authority of Singapore (MAS), such as financial advisory services, insurance broking and capital market services.
There are several benefits for non-residents (foreigners) and expatriates to open savings account in Singapore. Please see section “Open Bank account” on advise on what to ask before you open a savings account with any banks in Singapore.
Commercial banks can operate as:
- - Full Banks
- - Wholesale Banks
- - Offshore Banks
Full banks may provide the whole range of banking business permitted under the Banking Act.
The following local banks offer a full banking service including current and deposit accounts, ATM’s, credit and debit cards, loans, mortgages etc. These banks have the most extensive branch network. DBS owns POSB and therefore customers may use either bank’s ATM’s. OCBC and UOB operate a shared ATM system and therefore clients of both banks may use either bank’s ATM machines.
Foreign full banks with Qualifying Full Bank (“QFB”) privileges may operate a total of 25 locations. They may also:
- - Share ATMs among themselves, and relocate their sub-branches freely.
- - Negotiate with the local banks on a commercial basis to let their credit card holders obtain cash advances through the local bank’s ATM networks.
- - Provide debit services through an EFTPOS network,
- - Offer Supplementary Retirement Scheme and CPF Investment Scheme accounts, and
- - Accept fixed deposits
Not all of the foreign banks actually offer full bank services and there is a significant variation in the type and number of facilities provided. Depending on their cooperation agreements with local banks, they are limited in the number of ATM sites they may offer. Inquire about their arrangements when opening an account.
Examples of foreign banks with QFB privileges:
|Standard Chartered Bank|
|Bank of China|
Wholesale banks may engage in the same range of banking business as full banks, except that they operate as branches of foreign banks and may not carry out Singapore Dollar retail activities. They are not permitted to offer services such as the below without prior approval of MAS:
- - Operate savings accounts denominated in Singapore dollars
- - operate savings accounts denominated in foreign currency, whether in respect of its Domestic Banking Unit, or Asian Currency Unit
- - accept fixed deposits but in respect of Singapore dollar fixed deposits, the initial deposit shall not be less than S$250,000
- - may operate current accounts, but in respect of current accounts denominated in Singapore dollars where the customer is a natural person and a resident of Singapore, the current account shall not be interest-bearing
Offshore banks can engage in the same activities as full and wholesale banks for businesses transacted through their Asian Currency Units (ACUs). The ACU is an accounting unit, which the banks use to book all their foreign currency transactions conducted in the Asian Dollar Market (ADM). The banks’ Singapore dollar transactions are separately booked in the Domestic Banking Unit (DBU).
The typical activities of merchant banks in Singapore include:
- corporate finance
– underwriting of share and bond issues
– mergers and acquisitions
– portfolio investment management
– management consultancy
– other fee-based activities
Most merchant banks are able to compete with other commercial banks in the Asian Dollar Market. While merchant banks may not accept deposits or borrow from the public they may accept deposits or borrow from banks, finance companies, shareholders and companies controlled by their shareholders.
Finance companies focus on providing small-scale financing, including instalment credit for motor vehicles and consumer durables, and mortgage loans for housing. They are not permitted to grant unsecured credit facilities exceeding SGD 5,000. Generally they do not deal in any foreign currency.
The Monetary Authority of Singapore sounds the alert on financial advisors offering financial services without having a proper license. Currently, these services include advising others on investment products, issuance of research reports covering investment products, marketing of any collective investment schemes, as well as arranging life policies for others.