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If your immediate plans include starting a financial activity in Asia, and you have chosen Singapore for this, you should take into account some features of the jurisdiction's legislation. This publication describes the main aspects of regulating the acquisition of banking companies in Singapore, as well as restrictions on foreign ownership in the banking sector.

Restrictions for foreigners

Acquisitions of stakes in Singapore banks have no explicit foreign ownership restrictions. It should be noted that a registered Singapore bank must have a certain number of directors who are residents of the country but this is normal for most jurisdictions. As for digital banks, the situation is different here: such companies must be controlled by Singaporeans without fail.

How to buy a bank in Singapore

Acquisition of control over a Singapore bank requires permission from the Minister of Finance. Permission must be obtained if the person:

  1. becomes owners of at least 5 percent of voting rights in the licensed bank;
  2. owns at least 20% of the issued shares of the licensed bank;
  3. influences directors of a banking company to act in accordance with his or her interests.

The key factors in considering an application for control of a Singapore bank are:

  • experience of the controlling person;
  • the likelihood that the bank will continue to operate in compliance with the law;
  • compliance with national interests.

When a commercial bank is being set up, it must be registered with a financial regulator with a fully formed authorized capital. The fund's budget consists of the personal funds of the founders, declared and registered in percentage parts.

Regulation of foreign banks in Singapore

To obtain a banking license in Singapore, foreign banks can choose one of two options:

  • open a branch in Singapore;
  • register a subsidiary.

Often companies use the first option due to lower capital requirements. To create separate structural divisions (branches, representative offices), the bank is obliged to develop an intra-bank registration codification system for these divisions and provide each branch with an intra-bank registration code.

In case of failure

The financial regulator MAS has the power to intervene to resolve the insolvency if the licensed bank becomes insolvent. At the same time, a characteristic feature of the Singapore insolvency system is the desire to protect the interests and preserve the business of the debtor whenever possible. it is often advantageous for the debtor to initiate bankruptcy proceedings against him - the sooner the mechanisms of rehabilitation procedures begin to work (moratorium on meeting creditors' claims, rejection of unfavorable contracts), the more chances that the company's economic situation will stabilize. The laws on bankruptcy have introduced norms that the head of the debtor himself has the right to submit an appropriate application to the court, and the heads of debtor organizations actively use this right.

Final word

If you are interested in acquiring a bank in Singapore, please understand that the time it takes to obtain regulatory approval will depend on the nature and complexity of the transaction.

For more information or legal assistance in transactions for acquiring control over a Singapore bank, do not hesitate to contact our specialists. To schedule a consultation on banking regulation in Singapore please fill out the special form below.