Singapore: Blurred lines - MAS relaxes anti-commingling rules

11 July 2017

This article has been produced with Holborn Law, which operates in association with CMS

16 years ago, when MAS introduced the anti-commingling framework to separate financial and non-financial businesses of banks, the iPhone did not exist and clamshell Motorola Razrs were cool. 

Today, almost all Singaporeans carry smart phones and our wireless broadband penetration has gone up to 200%, making Singapore one of the most connected societies in the world.

This connectivity has made Singapore the perfect ground for technology disruption, and we have seen how technology disruption has impacted traditional business models and shaped consumer behaviour in Singapore. For example, instead of dining and shopping along Orchard Road, many of us now get our meals delivered via Deliveroo and make purchases on ecommerce platforms like Taobao or Honest Bee.

Financial services are not immune to technology disruption and the manner in which their customers consume their services. Non-financial companies such as WeChat have created platforms that enable customers to chat, purchase and pay for goods and services, including financial products, all within one mobile application. Such disruption encroaches onto activities that were historically in the financial services remit.

MAS recognises that this disruption has resulted in the increasing blurring of lines between financial and non-financial businesses, and that banks are facing increasing competition from non-financial businesses that have leveraged their large user base to provide digital wallets, payments and remittance services.

In 2011, MAS took a first step in giving banks greater allowance to carry out non-financial businesses that are related or complementary to their core financial businesses under certain conditions.

This time, MAS has gone further by streamlining the requirements for banks seeking to conduct or invest in permissible non-financial businesses. For example, banks will not need to seek prior regulatory approval before conducting or acquiring major equity stakes in permissible non-financial businesses. Other requirements such as conducting regular stress test or external audits have also been removed. As such, banks can more easily integrate banking services into customers’ day-to-day activities and deliver value added service to them by ensuring these additional services can be provided on the banks’ platform.

MAS has highlighted that it is still important for banks to focus on their core financial businesses and has consequently limited such non-financial businesses to 10% of a bank’s capital funds. Apart from certain digital platforms which banks are now expressly allowed to operate, banks would also need to seek case-by-case approval from MAS.

Going forward, non-financial businesses will continue to make inroads into traditional banking business, and banks need to be able to transform and adapt to such changes in the economy and society. We welcome MAS’ swift response to these changes around us, and look forward to the consultation paper in September which will have to strike a delicate balance between expanding the remit of banks to compete in this new economy and maintaining the safety and soundness of the financial sector.

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Agency Database

  • Austrian National Bank
    Term:
    Austrian National Bank
    Other Names:
    Oesterreichische Nationalbank (ONB/OeNB)
    Definition:
    Contributes on a stability-oriented monetary policy; safeguards financial sability; provides general public and the busines community with high quality cash. The competent authority for the authorisation and supervision of payment institutions (article 20).
    Area:
    Banking
    Type:
    Regulator
    Country:
    Austria
    URL:
    http://www.oenb.at/en/
  • Bank of England (BoE)
    Term:
    Bank of England (BoE)
    Other Names:
    Definition:
    Area:
    Banking
    Type:
    Policy Maker
    Country:
    UK
    URL:
    http://www.bankofengland.co.uk/Pages/home.aspx
  • Bank of France
    Term:
    Bank of France
    Other Names:
    Banque de France
    Definition:
    Monitors and regulates the banking market. Competent authority for the authorisation and supervision of payment institutions (specifically within the Bank La comité des établissements de credit et des entreprises d'investissement and La Commission bancaire).
    Area:
    Banking
    Type:
    Regulator
    Country:
    France
    URL:
    http://www.banque-france.fr/accueil.html
  • Bank of Greece
    Term:
    Bank of Greece
    Other Names:
    Definition:
    Responsible for implementing the Eurosystem's monetary policy in Greece and safeguarding the stability of the Greek financial system.The competent authority for the authorization and supervision of payment institutions.
    Area:
    Banking
    Type:
    Regulator
    Country:
    Greece
    URL:
    http://www.bankofgreece.gr/Pages/en/default.aspx
  • Bank of Italy
    Term:
    Bank of Italy
    Other Names:
    Banca d’Italia
    Definition:
    Central bank: banking and financial supervision. The competent authority for the authorisation and supervision of payment institutions (article 20).
    Area:
    Banking
    Type:
    Regulator
    Country:
    Italy
    URL:
    http://www.bancaditalia.it/;internal&action=_setlanguage.action?LANGUAGE=en
  • Bank of Portugal
    Term:
    Bank of Portugal
    Other Names:
    Banco de Portugal
    Definition:
    Area:
    Banking
    Type:
    Regulator
    Country:
    Portugal
    URL:
    http://www.bportugal.pt/en-US/Pages/inicio.aspx
  • Bank of Slovenia
    Term:
    Bank of Slovenia
    Other Names:
    Banka Slovenije (BSI)
    Definition:
    This is the central bank of the Republic of Slovenia. It implements the common monetary policy; co-manages the official foreign reserves of the monetary system; promotes smooth operation of payment systems. It is also the competent authority for the authorisation and supervision of payment institutions (banks, credit institutions) and it maintains accounts for Republic of Slovenia, government bodies and public entities.
    Area:
    Banking
    Type:
    Regulator
    Country:
    Slovenia
    URL:
    http://www.bsi.si/en/
  • Bank of Spain
    Term:
    Bank of Spain
    Other Names:
    Banco de Espana
    Definition:
    Central bank. The competent authority for the supervision of payment institutions (note the competent authority for the authorization of payment institutions is the Spanish Ministry of Finance).
    Area:
    Banking
    Type:
    Regulator
    Country:
    Spain
    URL:
    http://www.bde.es/bde/en/

Future Dates

* Estimated date

  • 8 December 2017

    Deadline for responses to the European Central Bank's draft guidance to banks regarding non-performing loans.

  • In the course of 2017

    Next phase of the post-implementation RDR review will be published by the FCA in this year; to be followed by a subsequent third phase of the review which will consider the longer-term implications.

  • 31 December 2017

    Deadline for EBA to submit report on the implementation of paragraphs 1, 8, 9 and 10 of Article 4 of the BRRD.