Local depositors would be exposed to possible contagion or a crisis of confidence arising from problems in the bank’s home market, or from problems related to its wholesale banking activities. MAS imposes a number of regulatory requirements on the locally-incorporated banks to protect depositors, including the higher capital adequacy requirements that I mentioned earlier and a minimum paid-up capital of $ billion. However, there are Qualified Full Banks (QFBs) and foreign full banks which operate as branches and accept retail deposits without any capital in Singapore. MAS’ approach has been to closely supervise these branches. They are also required to be members of the deposit insurance scheme, which provides a safety net for all non-bank depositors by insuring their deposits up to $ per depositor per bank. There are clear benefits, however, for foreign banks with a large retail presence to operate their retail business from a locally-incorporated subsidiary. Where the banks have corporate or investment banking businesses, these activities can continue to operate as part of their existing branches. This will allow banks to continue to benefit from cost efficiencies associated with a branch structure and minimise changes to their business models. Moreover, by conducting retail activities from a separate locally-incorporated entity, the bank will be seen by local retail customers as being strongly committed to the local market for the long-term. International discussions on this topic are ongoing and MAS is monitoring the debate closely. Conclusion To conclude, Singapore has built a reputation for credibility and prudence in the last 40 years.

Lim Hng Kiang: Bank capital adequacy and institutional structure – Singapore’s approach Keynote address by Mr Lim Hng Kiang, Minister for Trade and Industry and Deputy Chairman of the Monetary Authority of Singapore, at the 38th Association of Banks in Singapore (ABS) Annual Dinner, Singapore, 28 June 2011. *  *  *  Introduction Chairman, ABS, Council members of ABS, Ladies and Gentlemen It is my pleasure to be here this evening. I was last here to deliver the keynote address in 2007, prior to the global financial crisis. As economies now recover, especially in Asia, it is easy to forget how close the global financial system was to the precipice. Following the failure of Lehman Brothers, the solvency of many well-known financial institutions in the advanced economies came into question. Weaknesses and failures at the core of their banking system were transmitted to almost all sectors and countries. A global meltdown was averted only through extraordinary actions taken by central banks, governments and financial institutions themselves. Regulators globally have had the benefit of some distance from the depth of the crisis to reflect on what needs to be done to strengthen the resilience of the financial system. MAS has been doing likewise and tonight, I would like to explain MAS’ approach to reforms in the regulation of banking. Post-crisis reflection Singapore’s financial system withstood the global financial crisis well. This did not happen by chance. Singapore banks were, on the whole, prudent and had less risky balance sheets.