Singapore legislation
Clause 34
Clause 34
Minimum liquid assets
(1)
The Authority may, from time to time, by notice in writing to any designated financial holding company or class of designated financial holding companies, impose requirements in relation to the minimum amount or amounts of liquid assets to be held by the designated financial holding company or class of designated financial holding companies, having regard to the risks arising from the activities of the designated financial holding company and its FHC group and such other factors as the Authority considers relevant.
(2)
Without prejudice to the generality of subsection (1), the Authority may impose limits on each liquid asset or class of liquid assets to be held by a designated financial holding company or class of designated financial holding companies.
(3)
Where the Authority issues a notice under subsection (1) to a class of designated financial holding companies, the Authority may require different designated financial holding companies within the class of designated financial holding companies to hold different amount or amounts of liquid assets, having regard to the risks arising from the activities of each designated financial holding company and its FHC group, the systemic impact of each designated financial holding company and its FHC group on the financial sector and such other factors as the Authority may consider relevant.
(4)
Whenever the Authority issues a notice under subsection (1), each designated financial holding company shall be allowed such period of grace, being not less than 3 business days, as may be specified in the notice, in which to comply with its provisions.
(5)
A designated financial holding company shall not, during any period in which it has failed to comply with any requirement imposed under subsection (1), without the approval of the Authority, grant further credit facility to any person.
(6)
Notwithstanding subsection (1) and subject to subsection (9), a designated financial holding company may, in accordance with the requirements imposed under subsection (7), utilise its liquid assets held for the purposes of subsection (1) if the designated financial holding company —
is in a liquidity stress situation; and
is solvent immediately before, and will remain solvent after, the utilisation of its liquid assets.
(7)
For the purposes of subsection (6), the Authority may, from time to time, by notice in writing to a designated financial holding company impose requirements in relation to the utilisation by the designated financial holding company of its liquid assets held for the purposes of subsection (1), including —
the procedures which the designated financial holding company must comply with before or after utilising, or during the utilisation of, its liquid assets; and
the manner in which the designated financial holding company may utilise its liquid assets.
(8)
A designated financial holding company shall, within such time as may be specified by the Authority, provide any information required by the Authority in relation to its liquidity stress situation and the utilisation of its liquid assets held for the purposes of subsection (1).
(9)
Where the Authority is of the opinion that —
a designated financial holding company is not in a liquidity stress situation;
a designated financial holding company has failed to comply with any requirement imposed under subsection (7);
a designated financial holding company is or is likely to become insolvent, or that it is or is likely to become unable to meet its obligations, or that it is about to suspend payments; or
it is in the public interest to do so,the Authority may by notice in writing to the designated financial holding company —
where the designated financial holding company has already utilised its liquid assets held for the purposes of subsection (1), direct the designated financial holding company to comply with any requirement imposed under subsection (1) within such time as may be specified by the Authority in the notice; or
where the designated financial holding company has not, or has not fully, utilised its liquid assets held for the purposes of subsection (1), do one or more of the following:
refuse to allow the designated financial holding company to utilise its liquid assets held for the purposes of subsection (1) which are within the control of the Authority;
direct the designated financial holding company to cease utilising its liquid assets held for the purposes of subsection (1);
direct the designated financial holding company to comply with any requirement imposed under subsection (1) within such time as may be specified by the Authority in the notice.
(10)
Any designated financial holding company which fails to comply with —
subsection (5) or (8);
any requirement of the Authority under subsection (7); or
any direction of the Authority under subsection (1) or (9),shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part thereof during which the offence continues after conviction.
(11)
In this section —
Definition
“liquid assets” means —
notes and coins which are legal tender in Singapore other than assets maintained and held by the subsidiary of the designated financial holding company which is a bank incorporated in Singapore for the purposes of section 40 of the Banking Act (Cap. 19);
balances with the Authority other than —
cash balances maintained by a subsidiary of the designated financial holding company which is a bank incorporated in Singapore for the purposes of section 39 of the Banking Act; and
assets maintained and held by a subsidiary of the designated financial holding company which is a bank incorporated in Singapore for the purposes of section 40 of the Banking Act; and
such other assets as the Authority may from time to time approve;
Definition
“liquidity stress situation” has the meaning given to it in the Schedule.