In addition, banks in Singapore are guided by the Code of Consumer Banking Practice (Consumer Banking Code) and the Code of Conduct for Private Banking in Singapore (Private Banking Code). The Consumer Banking Code serves as a guide to banking best practice for retail banks, while the Private Banking Code sets standards for best practices in terms of competence and market conduct expected of banks operating in Singapore (including their employees) providing financial services to high-net-worth individuals. Neither the Consumer Banking Code nor the Private Banking Code have the force of law, but are the result of sectoral initiatives supported by the MAS. In addition, the SAM imposes the Basel Committee`s Net Stable Funding Ratio (NSFR) standard on banks designated by the MAS as D-SIBs. The NSFR requires banks to have a stable funding profile in terms of their asset mix and off-balance-sheet activities. MAS Opinion 652 on the Net Stable Funding Ratio (MAS Opinion 652) requires Singapore-based D-SIBs to maintain an all-currency NSFR of at least 100% at the banking group level after excluding certain entities from the banking group. Foreign-based D-SIBs must meet a minimum NSFR NSFR of 50% at company level or on a country-level group basis (if the SAM is approved for compliance on a country-level group basis). According to MAS Notification 637, Singapore-incorporated banks that are classified by MAS as domestic systemically important banks (D-SIBs) must meet capital requirements that are two percentage points higher than the Basel Committee on Banking Supervision (Basel Committee) capital base of at least 6.5%. a minimum Level 1 vehicle of 8% and a minimum vehicle of 10% overall.
Other banks registered in Singapore are only required to meet the minimum quota in accordance with the requirements of the Basel Committee. Commercial banks were previously licensed under the MAS Act. With effect from 1 July 2021, the licensing and regulation of commercial banks has been consolidated in the Banking Act. The scope of activities that a commercial bank can carry out is narrower than that of licensed full-bank banks and wholesale banks – in particular, a commercial bank is generally unable to accept deposits in Singapore dollars. MAS attaches great importance to good governance and the quality of Singapore-based bank directors. MAS conducts morning money market operations to ensure adequate liquidity in the banking system to meet banks` demand for precautionary and settlement balances without being excessive. MAS conducts money market transactions exclusively with treasury securities dealers in recognition of its role as a specialized intermediary in the Singapore government`s securities and money markets. Depending on economic and market conditions, MAS may provide more or less liquidity than necessary to meet banks` demand for precautionary and settlement balances. Strengthening resilience MAS fully implemented Basel III capital requirements for banks domiciled in Singapore as of 1 January 2013.
The MAS requires Singapore-based banks to meet capital adequacy standards above Basel capital standards. For Common Equity Tier 1 capital, Singapore-domiciled banks must maintain a ratio of at least 9% (including a capital conservation buffer requirement of 2.5%), compared to 7% for Basel III by 1 January 2015. MAS also implemented the other Basel III capital reforms in 2013 to improve capital quality, improve risk coverage and start monitoring the leverage ratio. MAS Opinion 637 also requires Singapore-incorporated banks to maintain a minimum leverage ratio of 3% at all times, which must be achieved with Tier 1 capital. This is in line with the Basel standard and applies to both the banking group and solo bank level. Wholesale banks may do the same banking as full banks, except that they do not engage in retail banking in Singapore dollars. They work within the framework of the guidelines issued by the MAS for the operation of wholesale banks. Notwithstanding the foregoing, a bank in Singapore is required, under Section 39 of the Banking Act and MAS Notice 758 on Minimum Cash Balance (MAS Notice 758), to maintain an aggregate minimum cash balance with MAS of at least 3% on average of its average eligible liabilities (as defined in MAS Notice 758) during a maintenance period.
reserves. MAS Opinion 637 implements the Basel III capital requirements for Singapore-domiciled banks and establishes minimum capital adequacy ratios (CARs) for Singapore-incorporated banks and the methodology for calculating these ratios. MAS Opinion 637 also sets out MAS`s expectations regarding the internal capital adequacy assessment process for banks domiciled in Singapore as part of the supervisory review process and sets out the minimum disclosure requirements for Singapore-resident banks with respect to their capital adequacy. MAS 637 also sets out data transfer and disclosure requirements for the valuation of global systemically important banks. Deposits are an important funding base for banks in Singapore. Singapore`s three local banking groups are also listed on SGX-ST and have issued securities to raise funds. Bank of Singapore is expected to carry out the best possible execution in relation to certain financial instruments in compliance with the requirements of applicable laws and regulations in the places where we operate. In line with the requirements of the Basel Committee, MAS introduced a capital conservation buffer of 2.5% above the minimum capital adequacy requirement set out in MAS Communication 637. The capital conservation buffer is satisfied with CET1 own funds and currently stands at 2.5%. Including the capital conservation buffer, Singapore-based banks, designated by MAS as D-SIB, must comply with CET1, Tier 1 and total CARs of 9%, 10.5% and 12.5%, respectively.
As with any other business, the legal framework for bank insolvency is found in the Insolvency, Restructuring and Dissolution Act 2018 (IRDA). In addition, the MAS has special powers vis-à-vis banks in accordance with the Banking Act and the MAS Act. These special powers are intended to protect depositors in certain circumstances, such as when a bank becomes insolvent, is unable to meet its obligations, suspends payments or operates in a manner that could harm the interests of its depositors or creditors. In this case, the MAS may, in accordance with the banking law, require the bank concerned to take action or refrain from acting. MAS may also appoint a legal adviser to advise the Bank on the proper conduct of its business.