Monetary Authority of Singapore announced today it now deems Standard Chartered a “significantly rooted foreign bank”, the first time it has granted this designation to any institution.
This means StanChart can operate additional “places of business”, which not only includes branches but also new business models.
According to the MAS announcement, “This will enable [Stan Chart] to have the same flexibility as Singapore-incorporated banking groups to establish subsidiaries, including with joint-venture partners, to operate new or alternative business models such as a digital-only bank.”
This approval comes as 21 applicants vie for one of five virtual-banking licenses on offer from MAS, including two that are complete retail operations and three limited to wholesale activities.
Standard Chartered received a standalone virtual-banking license in Hong Kong and launched Mox Bank. It has not indicated an interest in repeating this in Singapore – but now it doesn’t need to, as it can do so with its existing license should it wish.
And it can do so at a competitive advantage: treated as a local bank, Standard Chartered could launch a virtual bank with capital of only S$100 million – a far cry from the eventual S$1.5 billion expected of a retail virtual bank.
The concept of a “significantly rooted foreign bank” stems from a trade agreement with the European Union in 2012 that raised the possibility of a foreign bank winning recognition as essentially a Singaporean institution based on criteria including MAS’s perception of the bank’s alignment with Singaporean interests, and local presence.