Singapore is a flourishing financial center of international repute servicing . The banking industry is a key player in the countrys financial market segment, soon emerging as one of the strongest in the world.

Factors that have contributed to the success of the banking industry in Singapore include:

Liberalization of the domestic banking market.
Local banks strengthened their regional presence through mergers and acquisitions.
Expansion of foreign banks, some of which made Singapore a regional or even global platform for important banking services, which in turn led to increased competitiveness.
Increased competition spurred the development of innovative products and more competitive pricing models.

Growth of private banking industry

Singapore has capitalised on the growing number of high net worth individuals in Asia and other regions like Europe and the Middle East, emerging as a leading private banking destination for international investors. Singapore has earned the sobriquet Switzerland of Asia?, attributable to

Strict banking secrecy laws Section 47 of the Banking Act states that customer information shall not, in any way, be disclosed by a bank or any of its officers, to any other person except as expressly provided in the Banking Act.
Non-recognition of the 2005 European Tax Directive Singapore is one of the few remaining offshore centres that has not signed up to the EUs Savings Tax Directive, whose country members can exchange private information relating to individuals who bank and invest in these countries.
Generous tax incentives Capital gains and interest income from outside Singapore are not taxed here.

Private banks such as UBS, Credit Suisse, Citigroup and Standard Chartered to name a few, provide

global wealth management services
wealth and lifestyle advisory services
investment strategies
tax and estate planning
asset protection
credit services

Investment banking hub

The investment banking industry opened up as Singapore matured into a key international debt arranging hub in Asia. The following factors have contributed to the countrys active and thriving capital market:

Encouraging a steady flow of issuance from the Singapore Government, statutory boards, supra-nationals and corporates.
Launching the Approved Bond Intermediary Scheme that nurtured bond investors to sustain the debt market.
Growth of SGX as an International exchange which attracted many foreign companies, who account for more than a quarter of total listings.
High standards to maintain investor confidence led to various initiatives to enhance disclosure, strengthen market discipline and improve corporate governance of listed companies. These measures included: the Code of Corporate Governance, revisions to the SGX listing rules and the introduction of the new civil penalty regime under the Securities and Futures Act.

Most investment banks in Singapore perform various corporate-finance and investment related activities like:

Underwriting securities
Acting as an intermediary between an issuer of securities and the investing public
Acting as a broker for institutional clients
Facilitating mergers and acquisitions; and corporate reorganizations

Strengthening of local banking groups

A major move in the local banking sector was the consolidation of the previously 6 local banking groups into the present 3 main local banks (DBS, OCBC and UOB). This led to strengthening the banks capabilities, building their management teams and enhancing operational effectiveness. They have expanded their range of business activities and have also improved their business and risk management capabilities. Today, the local banks are one stop shops? designed to meet all the needs of their banking customers. With greater financial strength from the mergers and increased competition at home, local banks have begun to venture abroad and develop a regional footprint through overseas acquisitions.

Industry Snapshots

With one of the more well-established capital markets in Asia-Pacific, the Singapore Exchange (SGX) is the preferred listing location for more than 200 global companies.
Singapore has grown to be the largest Real Estate Investment Trust (REITs) market in Asia ex-Japan and also provides an extensive offering of investments in business trusts of shipping, aviation and infrastructure assets.
With an extensive range of both Singapore government securities and foreign corporate bonds available, Singapore offers fixed income investors a wide range of investment opportunities.
As one of the top 5 most active foreign exchange trading centres in the world, Singapore is also the second largest over-the-counter derivatives trading centre in Asia, and a leading commodities derivatives trading hub.
Singapore is recognized as one of the premier asset management location in Asia with total assets under management around S$1 trillion.

Types of Banks

Most banks in Singapore cater to different types of clients individuals, corporations or government agencies. These banks provide commercial banking (catering to businesses and corporations), retail banking (catering to individual members of the public) and private banking (catering to HNWIs) services. Banks can be classified into 2 main categories:

Local Banks (6)
Foreign Banks(117) further sub divided into
Full Banks (27) provide the whole range of banking business approved under the Banking Act. Six of the foreign banks operating in Singapore have been awarded Qualifying Full Bank (QFB) privileges. These banks include: HSBC, Citibank, Standard Chartered, Maybank, ABN AMRO and BNP Paribas.
Wholesale Banks (53) engage in the same range of banking activities as full banks, except Singapore Dollar retail banking activities. All wholesale banks in Singapore, operate as branches of foreign banks. Examples: ING bank, National Australia Bank, Barclays Bank, Deutsche Bank etc.
Offshore Banks (37) engage in the same activities as full and wholesale banks for businesses transacted through their Asian Currency Units (an accounting unit, which banks use to book all foreign currency transactions conducted in the Asian Dollar Market). The banks Singapore dollar transactions are separately booked in the Domestic Banking Unit (DBU). All offshore banks in Singapore, operate as branches of foreign banks. Examples: Korea Development Bank, Bank of Taiwan, Bank of New Zealand, Canadian Imperial Bank of Commerce etc.
Merchant banks (42) provide corporate finance, underwriting of share and bond issues, mergers and acquisitions, portfolio investment management, management consultancy and other fee-based activities. Most merchant banks have, with MAS approval, established ACUs, through which they compete with commercial banks in the Asian Dollar Market. In their DBU, they may accept deposits or borrow only from banks, finance companies, shareholders and companies controlled by their shareholders. Examples: Credit Suisse Singapore Ltd, Barclays Merchant Bank Singapore Ltd, ANZ Singapore Ltd, Axis Bank Ltd etc.

Major Banks in Singapore

Major local banks

DBS (Development Bank of Singapore) established in 1968, is considered the largest bank in Singapore and Southeast Asia, as measured by assets. It is a leading consumer bank in Singapore and Hong Kong, serving over 4 million and 1 million retail customers respectively. It also has the largest retail network in Singapore, with 80 branches at present. It ranked 14th in The Bankers Top 200 Asian Banks 2008?.
OCBC (Oversea Chinese Banking Corporation) established in 1912, is one of the largest financial institutions in the Singapore-Malaysia market with total assets of S$184 billion. It ranked 1st in Top 5 Regional Banks?, Asia Risk End-User Survey 2008.
UOB (United Overseas Bank) established in 1935, is a leading bank in Singapore with a strong presence in the Asia-Pacific region. As at 31 December 2007, the UOB Group had total assets of S$175.0 billion. It was awarded the Best Overall Fund Group in Singapore? during The Edge-Lipper Singapore Fund Awards 2008.

Major foreign banks

HSBC In Singapore, The Hong Kong and Shanghai Banking Corporation Limited first opened its doors in December 1877. HSBC is an approved Primary Dealer in the Singapore Government Securities Market and an Approved Bond Intermediary (ABI). It is a QFB honoured with 33 awards at Global Finance Awards 2006 byGlobal Finance.
Standard Chartered Standard Chartereds Singapore operations began in 1859 and today boasts of a largest branch network (20) among international banks in the Republic. It is the Groups second largest consumer banking market and was awarded a Qualifying Full Bank (QFB) licence in 1999. It is the largest custodian bank in Singapore for foreign institutions, rated top for the past seven years in Global Custodians Agent Bank Survey.
ABN-AMRO Singapore ABN AMRO is now owned by RBS, Santander and the Dutch government. Its various businesses around the globe are currently being separated from ABN AMRO and integrated in line with each owners plans.
Maybank Maybanks presence in Singapore began in 1960 as a full-licensed commercial bank. Maybank is currently among the top five banks in ASEAN and is a Qualifying Full Bank in Singapore. As of June 2008, Maybanks total assets amounted to S$22.7 billion in Singapore.
BNP Paribas BNP Paribas has been at the forefront of banking in Singapore since 1968 and was awarded a QFB status in 1999. Today, BNP Paribas Singapore assumes a prominent presence in the region by acting as the Groups regional hub for its business in Corporate and Investment Banking as well as Private Banking.
Citibank Citibank was the first American bank to set up a branch in Singapore in 1902. Although a relative latecomer to the retail-banking sector, the bank has grown into a formidable market player with major market share in key businesses including unsecured lending, deposits and investments and secured assets.

In Singapore, the laws regulating banking are found in the relevant Acts passed by Parliament (and their related subsidiary legislation), the common law and principles and rules of equity. The common law and principles and rules of equity are derived from case law. These legislations not only regulate the banking sector in Singapore, but also ensure that the legal framework for banking in Singapore keeps pace with the latest developments in the financial world. The relevant acts pertaining to the banking industry include:

Banking Act The Banking Act (Cap 19, 2003 Rev Ed) is the legislation that governs commercial banks in Singapore.
Monetary Authority of Singapore Act (Cap 186, 1999 Rev Ed) governs all matters related to and connected to MAS and its operations.
Anti Money Laundering Regulations
Payment & Settlement Systems Guidelines
Securities and Futures Act

Role of Monetary Authority of Singapore

In Singapore, the Monetary Authority of Singapore acts as a defacto central bank. It was established in 1971 in order to regulate Singapores financial industry to aid in its development as an international financial centre. Its primary function is to ensure that the financial markets operate in an efficient and smooth manner, in line with national economic goals. The MAS is responsible for the following:

Implementing monetary policy
Supervisor of the banking systems
Banker to the government
Banker to the banks
Controller of International Reserves
Issuer of currency
Issuer of banking licences
Lender of last resort