4. The Banking Regulations are amended by inserting, immediately after regulation 23F, the following regulation:| “Prescribed related or complementary business |
23G.—(1) For the purposes of section 30(1)(d) of the Act and subject to paragraphs (2) to (8), a business which fulfils the following criteria is prescribed as a business that any bank in Singapore may carry on, or enter into any partnership, joint venture or any other arrangement with any person to carry on:| (a) | the business is related or complementary to any of the core financial business which is carried on by the bank; | | (b) | the business is being carried on by a regulated financial institution in any jurisdiction and is permitted —| (i) | under the laws of that jurisdiction; and | | (ii) | by the supervisory authority of that regulated financial institution; |
| | (c) | the business is permitted to be carried on by the bank —| (i) | under the laws of the home jurisdiction of the bank; and | | (ii) | by the parent supervisory authority of the bank; |
| | (d) | the business is not any other business prescribed for the purposes of section 30(1)(d) of the Act or approved under section 30(1)(e) of the Act; and | | (e) | the business is not any of the following types of business:| (i) | property development, not including the property-related businesses prescribed in regulation 21; | | (ii) | manufacturing or selling of consumer goods; | | (iii) | provision of hotel and resort facilities; | | (iv) | property management of properties not held by the bank or any of its major stake companies; | | (v) | owning, operating or investing in facilities for the extraction, transportation, storage or distribution of commodities; and | | (vi) | owning, operating or investing in facilities for processing, refining or otherwise altering commodities. |
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(2) A bank in Singapore may carry on any business prescribed in paragraph (1) if, and only if —| (a) | the bank has appropriate policies and procedures, including well-defined risk management policies on financial and non-financial exposures and risk concentrations, and staff with the expertise to manage the business; | | (b) | where the bank is a bank incorporated outside Singapore or is a foreign-owned bank incorporated in Singapore with no experience in carrying on the business in its head office or parent bank, it has obtained the prior written approval of its head office or parent bank (as the case may be), and its parent supervisory authority, to carry on the business; and | | (c) | any equity investment in a company acquired or held by the bank arising from the business —| (i) | is not intended to be held by the bank for more than 7 years; or | | (ii) | is not intended to be held by the bank for the purpose of allowing the bank to participate in or make any management decisions for the company, |
| unless the company is a wholly-owned subsidiary of the bank acquired or held primarily for the purpose of segregating risks that arises from the carrying on of the business so as to prevent such risks from affecting the financial soundness and stability of the bank. |
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(3) A bank in Singapore shall, when carrying on any business prescribed in paragraph (1), limit the Aggregate Size of all such businesses —| (a) | where the bank is incorporated in Singapore, to —| (i) | 15% of its capital funds or such other percentage as the Authority may approve in any particular case (where applicable); and | | (ii) | 15% of the capital funds of its banking group or such other percentage as the Authority may approve in any particular case (where applicable); and |
| | (b) | where the bank is incorporated outside Singapore, to 15% of its capital funds or such other percentage as the Authority may approve in any particular case (where applicable). |
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(4) A bank in Singapore shall, when carrying on any business prescribed in paragraph (1) as well as any business prescribed in regulation 23F(1), limit the Aggregate Size of all such businesses —| (a) | where the bank is incorporated in Singapore, to —| (i) | 20% of its capital funds or such other percentage as the Authority may approve in any particular case (where applicable); and | | (ii) | 20% of the capital funds of its banking group or such other percentage as the Authority may approve in any particular case (where applicable); and |
| | (b) | where the bank is incorporated outside Singapore, to 20% of its capital funds or such other percentage as the Authority may approve in any particular case (where applicable). |
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| (5) A bank in Singapore shall provide reports to the Authority in accordance with the requirements specified in the Fourth Schedule, and provide such other information as the Authority may require in relation to any business prescribed in paragraph (1) that is carried on by the bank. |
| (6) A bank in Singapore that carries on any business prescribed in paragraph (1) shall comply with such other conditions or restrictions that the Authority may impose, from time to time, by notice in writing in relation to its carrying on of such business. |
| (7) If the Authority, having regard to the specific circumstances of a bank in Singapore (including whether the internal controls of the bank are sufficiently robust to effectively monitor and manage the risks of the bank), or in the event that any of the conditions or requirements in paragraphs (1) to (6) are not satisfied by the bank at any point in time, issues to the bank a written declaration that paragraph (1) shall no longer apply to the bank in relation to any business specified in the declaration from a specified date, then paragraph (1) shall not apply to the bank from the specified date with respect to that specified business. |
| (8) The Authority may, at any time where it considers it to be necessary in the circumstances, by notice in writing require a bank in Singapore to carry on any business prescribed in paragraph (1) in a wholly-owned subsidiary of the bank. |
(9) In this regulation, unless the context otherwise requires —| “Aggregate Size” means the total balance sheet asset value, total revenue or total exposures (whichever is the highest of the 3) or such other measure of the size of the businesses as the Authority may specify by notice in writing; |
| “banking group”, in relation to a bank incorporated in Singapore, means the bank incorporated in Singapore, its subsidiaries, and all other entities treated as part of the bank’s group of companies for accounting purposes according to Accounting Standards; |
“capital funds” —| (a) | in relation to a bank incorporated in Singapore, means the capital of the bank that is used for the purposes of calculating its capital adequacy ratio under section 10 of the Act; | | (b) | in relation to the banking group of a bank incorporated in Singapore, means the capital of the banking group that is used for the purposes of calculating the banking group’s capital adequacy ratio under section 10 of the Act; or | | (c) | in relation to a bank incorporated outside Singapore, means such net head office funds and such other liabilities as the Authority may, by notice in writing, specify. |
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“core financial business”, in relation to a bank, means the core business activities that the bank carries out based on its particular business model which are either —| (a) | businesses referred to in section 30(1)(a), (b) and (c) of the Act; or | | (b) | businesses prescribed under section 30(1)(d) of the Act which are similar to the businesses referred to in section 30(1)(a), (b) and (c) of the Act in terms of economic substance and risks; |
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| “equity investment” has the same meaning as in section 31(5) of the Act; |
| “holding company” has the same meaning as in section 5 of the Companies Act (Cap. 50); |
| “home jurisdiction”, in relation to a bank, means the jurisdiction under the laws of which the parent supervisory authority of the bank is responsible for supervising the bank, or has consolidated supervision authority over the bank, as the case may be; |
| “regulated financial institution”, in relation to any jurisdiction, means a financial institution that is licensed, registered, approved or otherwise regulated in that jurisdiction; |
“supervisory authority” —| (a) | in relation to a financial institution, the ultimate holding financial institution of which is a financial institution incorporated, formed or established in Singapore, means the Authority; or | | (b) | in relation to a financial institution, the ultimate holding financial institution of which is a financial institution incorporated, formed or established in a jurisdiction outside Singapore, means the supervisory authority which is responsible, under the laws of that jurisdiction, for supervising the ultimate holding financial institution; |
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“ultimate holding financial institution”, in relation to a financial institution, means —| (a) | if the ultimate holding company of the financial institution is a financial institution, the ultimate holding company; or | | (b) | in any other case, a holding company of the financial institution that is a financial institution and that is not itself a subsidiary of any other financial institution.”. |
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