Banks in Singapore are governed by the Banking Act set up by the Monetary Authority of Singapore (MAS). When the government changed the banking rules in 2001, it made it easier for foreign banks to establish branches in Singapore. Since then, many local banks have closed because they are often unable to compete with the foreign banks. Investors interested in opening accounts in Singapore banks need to become familiar with the important banking organizations, types of services offered by each classification of bank and key currency terms.
In addition to the usual practices of lending money, taking deposits and providing checks, commercial banks in Singapore offer other services. These include supplying insurance coverage, financial advice and capital market services.
Wholesale and full banks
Wholesale banks deal mainly with businesses, but have many restrictions on operating with individuals. Full banks serve both retail and corporate clients. Although both local and foreign banks can obtain these full banking licenses, foreign banks do not have the same privileges as Singapore-based banks. To open additional locations and more ATMs, foreign banks must apply for QFB (Qualifying Full Bank) licenses.
Not considered commercial banks, merchant banks follow the Merchant bank directives. These directives govern corporate finance activities, such as handling mergers and acquisitions, managing portfolios, underwriting shares and bonds and engaging in other activities for which clients pay fees.
ASEAN Bankers' Association
The ASEAN Bankers' Association (ABA) is part of the Association of Southeast Asian Nations (ASEAN) formed in 1967. In addition to its goal of improving the economies of its 10 country members, ASEAN works for peace and stability in Southeast Asia. Five national banking associations of these ASEAN countries founded a joint banking association in 1976. Later, other countries joined the original five members to work together on issues of mutual interest and increased globalization.
Asian currency units and domestic currency units
Similar to Euros, the ACU (Asian Currency Unit) is a unit of exchange based on the average of currency values used in 13 Asian countries. It is a bookkeeping unit used for all currency except the Singapore dollar, which is recorded in Domestic Banking Units (DBUs).
Monetary Authority of Singapore
The Monetary Authority of Singapore (MAS) is the governing force behind banks in Singapore. As the central bank and issuer of currency, not only is MAS the source of the Banking Act, it also serves as a resource for local and foreign banks by providing listings of bank locations, information on banking regulations and descriptions of bank categories on its website.