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Exclusion of entity carrying on business under section 30(1)(a), (b) or (c) of Act, etc., from section 32 of Act

Banking Regulations

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—(1) Subject to paragraphs (2), (3) and (4), section 32 of the Act does not apply to an entity that carries on —(a)a business prescribed in regulation 23G(1) or 23H(1); or(b)a business of investing in any entity that carries on a business prescribed in regulation 23G(1) or 23H(1).(2) In each case mentioned in the following sub-paragraphs, paragraph (1) applies only if the corresponding condition is satisfied:(a)in a case where the entity carries on a business mentioned in paragraph (1)(a) and other businesses — each of such other businesses is a business mentioned in section 30(1)(a), (b) or (c) of the Act, or a business prescribed for the purposes of section 30(1)(d) of the Act that is similar in economic substance and risk to a business mentioned in section 30(1)(a), (b) or (c) of the Act;(b)in a case where the entity carries on a business mentioned in paragraph (1)(b) and other businesses —(i)at least one of such other businesses is a business prescribed in regulation 23G(1) or 23H(1); and(ii)each of such other businesses is a business mentioned in sub-paragraph (a).(3) In addition to the condition mentioned in paragraph (2), paragraph (1) applies only if —(a)the aggregate non-financial business size of the bank concerned, after acquiring or holding a major stake in the entity, does not exceed —(i)in the case of a bank incorporated in Singapore —(A)10% of its capital funds; and(B)10% of the capital funds of its bank group; or(ii)in the case of the branches and offices located within Singapore of a bank incorporated outside Singapore — 1.5% of the assets that are reflected as assets in the balance sheet of those branches and offices (less net inter-bank lending);(b)the bank puts in place risk management and governance policies and procedures that are commensurate with the risks posed by all the businesses carried on by the entity;(c)the policies and procedures mentioned in sub-paragraph (b) have been approved by —(i)in the case of a bank incorporated in Singapore — the board of directors of the bank;(ii)in the case of the branches and offices located within Singapore of a bank incorporated outside Singapore, the head office of which has never carried on a materially similar business before — the board of directors of the bank; or(iii)in the case of the branches and offices located within Singapore of a bank incorporated outside Singapore, the head office of which has carried on or is carrying on a materially similar business — by an authorised person of the bank;(d)the bank notifies the Authority of the following matters:(i)a description of all the businesses carried on by the entity;(ii)any regulation or licensing requirement that the entity is or will be subject to, whether in Singapore or elsewhere;(iii)the nature and extent of the major stake in the entity acquired or held by the bank;(iv)the date on which the major stake in the entity is acquired by the bank, or (if applicable) the date on which the entity is incorporated, formed or established by the bank,at least 14 days before the earliest of the following:(v)any public announcement that the bank intends to acquire the major stake in the entity, or (if applicable) incorporate, form or establish the entity;(vi)the entry of the bank into any agreement to acquire the major stake in the entity, or (if applicable) incorporate, form or establish the entity;(vii)the date on which the major stake in the entity is acquired by the bank, or (if applicable) the date on which the entity is incorporated, formed or established by the bank;(e)the bank notifies the Authority of any change to the matters in relation to which information had been provided in the notification mentioned in sub-paragraph (d), before making the change or as soon as the bank becomes aware of the change;(f)the bank obtains prior approval from the Authority for the issuance by the bank of any guarantee, indemnity, letter of comfort or any other letter that imposes similar obligations on the bank as a guarantee or indemnity, or similar expectations on the bank as a letter of comfort, in respect of any business carried on by the entity;(g)where the entity is or is to be a subsidiary of the bank —(i)the bank has an agreement with the entity to allow the Authority and any person appointed by the Authority, at any time, to obtain any information from the entity and to inspect the books of the entity; and(ii)where the entity is regulated by a regulatory authority in a foreign country or territory, the bank is satisfied, from its own due diligence or based on professional advice, that the Authority and any person appointed by the Authority are not prohibited from obtaining any information from, or inspecting the books of, the entity; and(h)where the entity is a related corporation of the bank, the entity does not use the bank’s name, logo or trade mark in the course of the business.(4) A bank in Singapore must, starting on the date of its acquisition of a major stake in any entity and during the period in which it holds such major stake —(a)submit a report to the Authority within 30 days after the last day of every quarter, or a later date approved by the Authority in writing, containing the information specified in the Second Schedule; and(b)provide any other information that the Authority may require, in relation to any entity in which the bank acquired or holds a major stake under this regulation.(5) The Authority may —(a)having regard to the specific circumstances of a bank in Singapore, including whether the risk management and governance policies and procedures of the bank in Singapore are sufficiently robust to effectively monitor and manage the risks of the entity; or(b)if any condition or requirement imposed on a bank in Singapore is not satisfied by the bank at any time,issue to the bank a written declaration that paragraph (1) does not apply to the bank in relation to any entity specified in the declaration on or after a specified date.(6) Where a written declaration is issued under paragraph (5), paragraph (1) does not apply to the bank in Singapore on or after the specified date with respect to the specified entity.(7) In this regulation —“aggregate non-financial business size”, “authorised person”, “capital funds”, “net inter-bank lending” and “quarter” have the meanings given to those terms by regulation 23G(7);“regulatory authority”, in relation to a foreign country or territory, means an authority of the foreign country or territory exercising any function that corresponds to a regulatory function of the Authority under the Act, the Monetary Authority of Singapore Act (Cap. 186) or any of the written laws set out in the Schedule to that Act.

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