Monetary Authority of Singapore/media/MAS/Regulations and Financial... · Web viewIn assessing an...

APPLICATION TO SET UPWHOLESALE BANK / MERCHANT BANK

EXPLANATORY NOTES

Criteria for Assessment of Applications

MAS' admission criteria apply across the board to all financial institutions engaged in banking activities. In assessing an application for banking licence or to operate as a merchant bank, MAS takes into consideration, inter alia, the following factors:

1. The financial soundness, track record, international standing and reputation of the applicant and its parent institution or major shareholders. This includes, amongst others, an assessment of the ability of the applicant and its parent institution in meeting international capital requirements in accordance with the Basel Capital Adequacy Framework. Ranking of the applicant and its parent institution in the world and home country in terms of total assets and capital strength will also be taken into consideration;

2. The strength of the home country supervision and the willingness and ability of the home supervisory authority to cooperate with MAS. This includes the supervision of the applicant and its parent institution by the home country supervisory authority on a consolidated basis in accordance with the principles in the Basel Concordat. It also includes the legal and regulatory framework of the home authorities for cross-border crisis cooperation and coordination, and recovery and resolution planning. The applicant must have written consent from its home country supervisory authority for the establishment of a banking operation in Singapore.

3. A well-considered strategy in banking or financial services, supported by sound business plans which include a detailed assessment of the sustained economic viability as well as the nature and criticality of the business; and

4. Risk management systems and processes which are robust and commensurate with the size and complexity of its proposed business.

Information to be provided in the Application

Applicants should provide information as prescribed in the Application Form. The Application Form comprises the following sections-

Section I - Background information

Section II - Financial indicators of the bank on a global basis and credit ratings

Section III - Overview of strategies of the Group in Singapore

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Section IV - Detailed plans for each major business area of the bank. The bank should fill up a separate set of Section V for each relevant business areas.

Section V - Banking system

Section V I - Any other information

Section V I I - Documents to be submitted

For Sections III and IV, the information provided should include activities undertaken by other financial institutions in Singapore under the control of the Group, such as its merchant bank, insurance company, holders of capital markets services licence or holders of financial adviser’s licence. Please note that the information supplied should reflect both the existing scope of activities undertaken as well as projections and plans over the next 3 years. Although projections are only for 3 years, banks are encouraged to adopt a longer term approach towards the plans and projections provided in the application. MAS may request for more information where needed.

Please attach additional pages, where needed, and any other information to support the application.

Sub m ission of A ppli c a t i on F o rm

The application should be submitted by the Chief Executive or equivalent of the bank or its Singapore office, where applicable. All applications should be sent to the attention of:

Ms Ho Hern Shin Assistant Managing Director (Banking & Insurance)Monetary Authority of Singapore10 Shenton Way MAS Building Singapore 079117

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APPLICATION FORM TO SET UP WHOLESALE BANK/ MERCHANT BANK

(a) Name of Applicant Bank: Click here to enter text.

(b) Address: Click here to enter text.

Tel: Click here to enter text. Fax: Click here to enter text.

(c) Country of Incorporation: Click here to enter text.

(d) Applicant (The application should be submitted by the CEO or equivalent of the bank or its Singapore office, who should attest that the information submitted is true to the best of his knowledge. Your bank may be required to furnish additional information and any change should be communicated promptly to MAS. Misrepresentations or omissions of material facts may be grounds for rejecting the application).

Name (in Block Letters) :Click here to enter text.

Designation :Click here to enter text.

Telephone :Click here to enter text.

E-mail :Click here to enter text.

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SECTION I: BACKGROUND INFORMATION

A. BRIEF HISTORY

i. Please provide a brief history of your bank including information on any takeovers involving your bank or merger with other entities.

Click here to enter text.

B. SHAREHOLDING STRUCTURE & ENTITIES WITH SIGNIFICANT BUSINESS ACTIVITIES/FUNCTIONS

i. List the names of shareholders holding 5% or more of the shares or voting power of your bank and your bank's holding company, if applicable.


ii. State the shareholding or voting power of each of these shareholders, grouping together family or related shareholders where possible.


iii. If there are no shareholdings or voting power exceeding 5%, list the names and shareholding or voting power of each of the 10 largest shareholders, grouping together family or related shareholders where possible.


iv. State the name of the stock exchange your bank is listed on


v. If your bank is a subsidiary, state the name, address and business activities of the holding company and name of the stock exchange it is listed on and its shareholding in your bank.


vi. State the names and places of incorporation and business activities of all subsidiaries and affiliates and your bank’s shareholding in these entities. For the above, please assess and explain which business activities are considered as principal businesses to the Group. Thereafter, indicate which subsidiaries or affiliates house these principal businesses.


vii. Describe functions (e.g. risk management, treasury and etc) which are considered critical to the operations of the Group. Thereafter, please map the functions to the business lines and indicate which entities house these functions.

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viii.If not already addressed above, which business activities and functions, if discontinued abruptly, can cause significant disruption to the Group, the financial sector or economy of the jurisdiction(s) which the Group operate in. Please elaborate on each. For these business activities and functions, further elaborate how that business activity or function is provided by the Group, the key features of the business activity or function and the scale of provision (e.g. market share) by the Group.


ix. Attach an organization chart (showing all subsidiaries and affiliates) of your bank and any holding company with controlling interest1 or ability to exercise significant influence over your bank.


x. Attach a chart showing the principal business and critical function (to be defined) across various legal entities (if any) within the Group. In the chart, please also highlight any holding companies with controlling interest or ability to exercise significant influence over the legal entities housing the principal businesses and / or critical functions.


C. MANAGEMENT

i. List the names of members of the Board of Directors, and where relevant, supervisory boards. Provide the names and experience of the Chairman, Chief Executive and senior executives (EVP or SVP) of your bank and its holding company if your bank is a subsidiary, including those who would be in charge of the Singapore office.


D. OVERSEAS NETWORK

i. List your bank’s international branch network, representative offices and joint ventures.


E. ACTIONS AGAINST BANK

i. Was your bank (including branches) or your bank’s holding company, related subsidiaries and associated companies, or their directors, convicted in a Court of Law or censured or reprimanded by your bank's or other regulatory authorities during the last 3 years or are there any proceedings now ongoing which may lead to such a conviction?

1 A shareholder with controlling interest is one which holds 20% or more of the shares/voting power of the company.

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ii. Are there any restrictions imposed on the operations of your bank (including branches) or your bank’s holding company, related subsidiaries and associated companies by your bank's home or other regulatory authorities?


iii. Has your bank had any of its previous applications to open banking offices (branches or subsidiaries) or representative offices in other countries rejected? If yes, please elaborate.


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SECTION II: FINANCIAL INDICATORS AND CREDIT RATINGS

A. FINANCIAL INDICATORS [Please provide the following information and any other information which is relevant.]

Ranking

i. Bank's ranking in world and home country for the past 3 years in terms of: Total assets as published by "The Banker" Tier 1 capital as published by "The Banker"

If the bank is not ranked, please provide the ranking of the group.


Capital Ratios

i. Bank's and Group’s capital ratios (Tier 1 and Total Capital), including breakdown of components of capital for the past 3 years and explanations for any significant changes.


Size of Operations

i. Bank's size of overseas/global operations for the past 3 years in terms of: Assets Income

All figures to be quoted in US$’m.


Financial Ratio Analysis

i. Liquidity ratios for your bank for the past 3 years:

20__ 20__ 20__Total deposits/total liabilities




Net interbank deposits / total liabilities




Loans/deposits and bonds




Liquid assets, securities and interbank assets/total assets




Please insert additional information below, if any.

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ii. Profitability ratios for your bank for the past 3 years:

20__ 20__ 20__Operating profit/total assets




Operating profit/equity Click here to enter text.



Net interest income /total assets




Net interest income /total income




Pre-tax profits/total income




Please insert additional information below, if any. Click here to enter text.

iii. Asset quality ratios for your bank for the past 3 years:

20__ 20__ 20__Loan loss provisions /total loans




Loan loss provisions /operating income




Non-performing loans/total loans




Loan loss provisions /non-performing loans





B. NON-PERFORMING ASSETS

i. Bank’s non-performing assets in the last 3 years in the format below.

All figures to be quoted in US$’m 20__ 20__ 20__

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Total non-performing loans (NPL) with a breakdown into the various internal loan grades classified as NPL.




Restructured loans Click here to enter text.



Specific provisions Click here to enter text.



General provisions Click here to enter text.




ii. Describe your bank's loan grading system. Please give details of the criteria used in grading loans and provisioning policy, and the classification of loans as non-performing and/or restructured, including the accrual of interest for non-performing loans.


iii. State the amount of loans and advances to non-bank customers according to economic sectors such as commerce, industry, etc, for the latest financial year.


iv. Indicate the credit risk exposure to individual countries according to bank and non-bank sectors, and the total provision made for exposures to each country for the latest financial year.


C. CREDIT AND SUPPORT RATINGS

i. Provide credit and support ratings for your bank and Group in the last 3 years in the format below.

Bank Group20__ 20__ 20__ 20__ 20__ 20__

Fitch: Viability Rating Click here to enter text.






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Fitch: Support Rating Click here to enter text.






Moody’s: Financial Strength Rating







Standard & Poors: Long Term Counterparty Rating







Ratings from other agencies








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SECTION III: OVERVIEW OF PLANS FOR SINGAPORE OPERATIONS

A. EXISTING AND PLANNED SCALE OF OPERATIONS IN SINGAPORE

i. Briefly describe how the operations in Singapore will be staffed and supervised by the Head Office, and/or any intermediate entity exercising control over the Singapore office.


ii. For a bank incorporated in Singapore, state the proposed name, authorized capital and paid-up capital, names, and addresses of the shareholders and their ownership of the proposed bank in actual and percentage terms.


iii. Provide a detailed description of the source of funds with regard to the initial disbursement of capital.


iv. Provide a detailed description of : the Group’s existing activities in Singapore; the business strategies/ new project pipeline for the Singapore operations for the next

three years; and the financial and operational linkages and interdependencies between the activities in

Singapore and the rest of the Group. Where significant linkages and interdependencies exist, please elaborate on possible external factors or internal constraints that could impact such linkages and interdependencies.


v. Indicate how the operations in Singapore will be funded and provide projected Balance Sheet and Profit & Loss Statement for the next 3 years.


vi. If the Group is undergoing / planning to undergo some significant changes globally e.g. merger, restructuring or expansion in particular business areas or markets, please outline and elaborate on how these changes may affect the operations in Singapore.


Further details should be provided for each business area in Section IV.

B. RISK MANAGEMENT

i. Outline the framework of your bank's risk management and monitoring system with respect to the major risks faced by your bank.

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ii. Describe the roles, functions and types of risk management activities performed in Singapore, including those for the regional and global business activities, if any, and the capabilities and resources (including manpower, MIS, risk systems, etc) in Singapore.


iii. Provide information on major plans and initiatives in risk management activities in Singapore, including key areas, which have been highlighted by your auditors or parent supervisors for enhancement to commensurate with the activities of the bank, if applicable.


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SECTION IV: DETAILED PLANS FOR EACH BUSINESS AREA

Business Areas: Commercial Banking / Treasury / Capital Markets (Debt) / Capital Markets (Equity) / Investment Banking / Asset Management / Operations and

Processing / Commodities / Technology Development and Support / Others (please specify) *

* Please indicate accordingly in your submission.

A. STRUCTURE OF BUSINESS AREA WITHIN THE APPLICANT’S GROUP

i. Describe how your group’s activities in this business area are structured (including reporting channels) both (1) globally and (2) in the Asia Pacific region.


ii. Attach an organization chart of the Singapore office, which should include the reporting lines to the bank’s Head Office (including intermediate entity, where applicable)


iii. Describe the business lines handled by the Singapore office as well as its scope of geographical coverage.


iv. For the business lines described above, please assess and explain: Which business lines are considered critical to the Group’s operations, and the manner

they are considered critical e.g. financially and operationally? Which business lines would be significantly connected to other financial market

participants or Singapore’s financial market infrastructure (e.g. exchange, clearing house, and payment and settlement systems)?

What is the projected market share of the business line?


v. Describe the responsibilities of the Singapore office in the context of the Group's global and Asia Pacific operations.


vi. Elaborate on the nature of the relationship and type of interactions between the Singapore office and the Group’s global and Asia Pacific legal entities in the ordinary course of business.


vii. In the case of a business activity matrix, attach an organisation chart of the location and reporting structure of the respective business/functional heads globally, within the Asia Pacific region, and in Singapore.


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viii.Are cross-border booking arrangements prevalent in the Singapore office? If so, what are the general types of offshore transactions that are booked in Singapore and vice versa?


ix. What is the governing law for the Singapore office’s transactions?


x. Provide details of main sources of income (including estimates of assets under management, trading, and fee income) over the next 3 years.


xi. Supply details of any expansion plans and anticipated manpower/staffing requirements in the next 3 years.


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SECTION V: BANKING SYSTEM

A. OVERVIEW

i. Briefly describe the banking system in your bank’s home country. You should provide more information on the licence your bank operates under if more than one type of licence is issued in your bank’s home country


B. SUPERVISORY FRAMEWORK

i. Briefly describe the functions and powers of the home country supervisory authority of your bank and holding company2, and the extent to which the authority exercises comprehensive or consolidated supervision, including the manner in which it supervises your bank, its subsidiaries and associates to assess your bank’s overall financial condition and compliance with laws and regulations.


ii. Indicate the frequency and scope of on-site examinations conducted by the home country supervisory authority and the date of your bank’s most recent examination.


iii. Where the home country of your bank is not a Member to the WTO agreement and your bank is not owned or controlled by natural persons or juridical persons of a WTO member country3, state whether the home country authorities of your bank would accord reciprocity to Singapore-incorporated banks seeking to establish a banking office (branch or subsidiary) or representative office in the home country should your bank be granted a licence to operate in Singapore. Please elaborate on your home country’s reciprocity policies and arrangements, if any.


C. LEGISLATION IN HOME COUNTRY

i. Describe the resolution regime in your home country, including: the objectives. the resolution powers and the legislation these are set out in. Some examples include the

ability to require a change in management or a transfer of business to another entity, and suspend capital distribution.

the scope of application of the resolution powers, whether it applies to banks, insurers, securities brokerages, asset management companies, or other financial institutions. Does the scope of application extend to the bank in Singapore, and if so, what are the possible obligations or roles that the bank in Singapore is expected to fulfill.

2 In countries where the applicant and holding company are supervised by more than one agency, provide information on the agencies concerned.3 Please refer to Article XXVII of the General Agreement on Trade in Services to determine if your bank is considered to be owned or controlled by persons of a WTO Member.

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the authority that exercises the resolution powers. If more than one national authority is or could be involved in deciding whether to activate the resolution regime or exercise certain resolution powers, the respective roles and responsibilities of each authority and how the decision is made. If there is expected involvement of the national courts, please elaborate.

triggers or pre-conditions for the exercise of the resolution powers by your country’s resolution authority.

whether and how your country’s legal framework triggers any automatic consequences or actions in the event of official intervention and/or initiation of administration, resolution, receivership, winding up proceedings or equivalent proceedings of the bank in Singapore. Elaborate whether the legal framework provides for means to stop these automatic actions.


ii. Does the bank already have an existing resolution plan at Head Office level which has been approved or shared with the home regulator? If so, please explain how the proposed Singapore operations will fit into the Group resolution plan.


iii. Is there a procedure in your jurisdiction for the recognition of foreign insolvency proceedings? What would be the procedure for obtaining recognition under your country’s laws? Would actions taken by MAS to resolve the bank in Singapore be recognised in your country?


iv. Are there any restrictions to the transfer of assets between the parent company and the bank in Singapore in ordinary times, during a crisis and in the event of a resolution? If so, elaborate on the restrictions and describe the stressed scenarios.


v. Does your home country have any restrictions to cooperate and share information, including but not limited to, that in relation to resolution and recovery of financial institutions, with any host authorities? If yes, elaborate on the restrictions, for example, the types of restricted information, and the circumstances under which information cannot be shared.


vi. Do your country’s laws require the disclosure of the crisis situation or actions taken in relation to the crisis, and to whom are such disclosures made?


vii. Is there any deposit insurance scheme in your home country? If yes, state the types and amounts of deposits entitled to protection, how the scheme is funded, how it would be used during a resolution, and whether the fund can be used for purposes other than to pay insured depositors. Do the deposit protection arrangements extend to deposits placed with the bank in Singapore?

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viii.Does your home country provide for depositor priority? Does your home country have any legislation which will confer lower priority to depositors in the Singapore office vis-à-vis the home country depositors, in repayment of deposits or any other non-bank funds in the event of resolution, receivership, winding up proceedings or equivalent proceedings of the bank? Are there any foreign exchange controls on movement of funds from and to your home country? If yes, please elaborate.


ix. Is there any protection scheme for investors in financial products other than bank deposits?


x. Under what circumstances or conditions would the authorities provide funding, liquidity, or other forms of support to a financial institution, either to assist the financial institution in recovering from stress situations, or in the event of a resolution? Would such support extend to the bank in Singapore? Which authorities in the country (such as the central bank, supervisory authority, or other government agencies) have the powers or mandate to provide such support?


xi. Are there any restrictions on capital and liquidity flows or foreign exchange controls on movements of funds from and to your country, under both “business-as-usual” and stressed scenarios? If so, elaborate on the restrictions and describe the stressed scenarios.


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SECTION VI: ANY OTHER INFORMATION

A. ANY OTHER INFORMATION WHICH WILL SUPPORT YOUR BANK’S APPLICATION


SECTION VII: DOCUMENTS TO BE SUBMITTED

A certified English translation is required for each of the following documents if the original is not in English:

a) Original letter from the home country supervisory authority approving the establishment of the office in Singapore

b) Certified copy of the Memorandum and Articles of Association of your bankc) Undertaking from your bank to keep MAS informed of any material adverse developments,

including breach of legal and prudential requirementsd) Annual Reports of your bank for the last 2 years, and a Balance Sheet and Profit and Loss

Account dated not more than 3 months prior to the date of the applicatione) Annual Reports of your bank’s holding company or shareholders with controlling interest for

the latest financial year.

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