Exposures and credit facilities resulting in concentration risk
29.—(1) The Authority may by written notice to any bank in Singapore, or any class of banks in Singapore, impose requirements that are necessary or expedient for the purposes of —(a)
identifying any person or class of persons, where exposure of the bank, or a bank within the class of banks, to the person or class of persons may result in concentration risk to the bank; or
(b)
limiting the exposure of the bank, or a bank within the class of banks, to any person or class of persons, where the exposure may result in concentration risk to the bank.[1/2020]
(2) Without limiting subsection (1), the Authority may in a notice issued under that subsection —(a)
specify the limit on any exposure;
(b)
exclude any exposure from any limit;
(c)
specify the manner in which and the process by which —(i)
any exposure is to be measured or aggregated; and
(ii)
a person or class of persons mentioned in subsection (1)(a) or (b) is to be identified;
(d)
exclude any bank or class of banks from any requirement imposed under subsection (1);
(e)
vary any limit in a particular case;
(f)
require the bank in Singapore or a bank within the class of banks in Singapore to report its exposures to the Authority; and
(g)
specify the manner in which and the times at which the bank in Singapore or a bank within the class of banks in Singapore must report its exposures to the Authority.[1/2020]
(3) A bank in Singapore must not grant any credit facility against the security of its own shares.
(4) [Deleted by Act 5 of 2016]
(5) [Deleted by Act 5 of 2016]
(6) Any bank which fails to comply with subsection (3) or any requirement imposed under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $100,000 and, in the case of a continuing offence, to a further fine not exceeding $10,000 for every day or part of a day during which the offence continues after conviction.
(7) In this section, “exposure” has the meaning given in the Fifth Schedule.[1/2020]
Credit facilities, exposures and transactions that may result in conflict of interest
29A.—(1) The Authority may by written notice to any bank in Singapore, or any class of banks in Singapore, impose requirements that are reasonably necessary for the purposes of monitoring and controlling the risk of conflict between the interests of the bank in Singapore or a bank within the class of banks in Singapore, and the interests of any person, branch, entity or head office mentioned in section 27(2)(a), (b), (c), (d), (e), (f), (h), (i) or (j), by —(a)
identifying any credit facility from the bank or any branch or entity in its bank group to, any exposure of the bank or any branch or entity in its bank group to, or any transaction of the bank or any branch or entity in its bank group with, any person, branch, entity or head office mentioned in section 27(2)(a), (b), (c), (d), (e), (f), (h), (i) or (j); or
(b)
monitoring, limiting or restricting the credit facilities, exposures and transactions mentioned in paragraph (a).[1/2020]
(2) For the purposes of subsection (1), the reference to the risk of conflict between —(a)
the interests of the bank in Singapore or a bank within the class of banks in Singapore; and
(b)
the interests of any branch or head office mentioned in section 27(2)(d),
is a reference to the risk of conflict between —
(c)
interests relating to the business of the bank in Singapore; and
(d)
interests relating to the business carried out through the branch or head office.[1/2020]
(3) Without limiting subsection (1), a notice under that subsection may —(a)
specify the manner in which and the process by which the bank may grant any credit facility to, create any exposure to, or enter into any transaction with, a person, branch, entity or head office mentioned in section 27(2)(a), (b), (c), (d), (e), (f), (h), (i) or (j);
(b)
specify the terms and conditions under which the bank may grant any credit facility to, create any exposure to, or enter into any transaction with, a person, branch, entity or head office mentioned in section 27(2)(a), (b), (c), (d), (e), (f), (h), (i) or (j), including the terms and conditions on which such credit facility, exposure or transaction may be terminated or avoided;
(c)
specify the manner in which and the process by which a credit facility, exposure or transaction mentioned in subsection (1)(a) is to be identified;
(d)
specify the manner in which and the process by which credit facilities, exposures or transactions mentioned in subsection (1)(a) are to be monitored;
(e)
specify the policies and procedures that a bank must implement in relation to credit facilities, exposures or transactions mentioned in subsection (1)(a); and
(f)
specify the manner in which and the process by which the bank is to determine whether a person, branch, entity or head office is a person, branch, entity or head office mentioned in section 27(2)(a), (b), (c), (d), (e), (f), (h), (i) or (j).[1/2020]
(4) If it appears to the Authority that any credit facility from a bank in Singapore to, any exposure of a bank in Singapore to, or any transaction of a bank in Singapore with, any person, branch, entity or head office mentioned in subsection (5) is detrimental to the interests of the depositors of the bank, the Authority may by written notice to the bank —(a)
direct the bank to —(i)
secure repayment of the credit facility;
(ii)
reduce or eliminate the exposure; or
(iii)
terminate the transaction;
(b)
prohibit the bank from granting any credit facility to, creating any exposure to, or entering into any transaction with, the person, branch, entity or head office; or
(c)
impose restrictions on the grant of any credit facility to, the creation of any exposure to, or the entry into any transaction with, the person, branch, entity or head office.[1/2020]
(5) The persons, branches, entities and head offices mentioned in subsection (4) are the following:(a)
any person, branch, entity or head office mentioned in section 27(2)(a), (b), (c), (d), (e), (f), (g), (h), (i) or (j);
(b)
any firm or limited liability partnership of which the bank is a partner, a manager, an agent, a guarantor or a surety;
(c)
any company of which any of the directors of the bank is a director or an agent;
(d)
any company of which the bank or any of its officers (other than directors), employees or other persons who receive remuneration from the bank (other than for professional services rendered to the bank) is a director, an executive officer, an agent, a guarantor or a surety;
(e)
any officer of the bank (other than a director of the bank), where the aggregate value of the credit facilities from the bank to that officer, exposures of the bank to that officer and transactions of the bank with that officer exceed one year’s emoluments of that officer;
(f)
any employee of the bank (other than a director of the bank), where the aggregate value of the credit facilities from the bank to that employee, exposures of the bank to that employee and transactions of the bank with that employee exceed one year’s emoluments of that employee;
(g)
any person who receives remuneration from the bank (other than a director, officer or employee of the bank or a person who receives remuneration for professional services rendered to the bank), where the aggregate value of the credit facilities from the bank to that person, exposures of the bank to that person and transactions of the bank with that person exceed one year’s emoluments of that person.[1/2020]
(6) Any bank which fails to comply with any requirement imposed under subsection (1) or (4) 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 of a day during which the offence continues after conviction.[1/2020]
(7) In this section, “bank group”, “director”, “exposure”, and “transaction” have the meanings given in the Fifth Schedule.[1/2020]
Businesses which banks in Singapore may carry out
30.—(1) A bank in Singapore must not carry on, or enter into any partnership, joint venture or other arrangement with any person to carry on, whether in Singapore or elsewhere, any business except for the following:(a)
banking business;
(b)
any business the conduct of which is regulated or authorised by the Authority or, if carried on in Singapore, would be regulated or authorised by the Authority under any written law;
(c)
any business which is incidental to the business which the bank may carry on under paragraph (a) or (b);
(d)
any business or class of business as the Authority may prescribe, subject to such conditions as may be prescribed;
(e)
any other business as the Authority may approve for the purposes of this section, subject to such conditions as the Authority may impose.[5/2016]
(2) Nothing in this section —(a)
prevents a bank from holding any equity investment in a company in accordance with section 31; or
(b)
is to be construed as exempting a bank from any requirement which, apart from this section, the bank is required to comply with under any written law for the conduct of any business.
(3) Any bank which contravenes this section or fails to comply with any condition imposed or prescribed under this section 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 of a day during which the offence continues after conviction.
Limit on equity investments
31.—(1) A bank incorporated in Singapore must not acquire or hold any equity investment in a single company, the value of which exceeds in the aggregate 2% of the capital funds of the bank or such other percentage as the Authority may prescribe.[1/2020]
(1A) A bank incorporated outside Singapore must not, through a branch or office located within Singapore, acquire or hold any equity investment in a single company, the value of which exceeds in the aggregate —(a)
any limit prescribed by the Authority; or
(b)
any limit specified by the Authority in a particular case by written notice to that branch or office.[1/2020]
(2) This section does not apply to —(a)
any interest held by way of security for the purposes of a transaction entered into in the ordinary course of the business of the bank in Singapore;
(b)
any shareholding or interest acquired or held by a bank in Singapore in the course of satisfaction of debts due to it which is disposed of at the earliest suitable opportunity; or
(c)
any major stake approved under section 32.
(3) The Authority may, by regulations —(a)
provide for the manner of valuation of investments for the purposes of compliance with this section; and
(b)
exclude the operation of this section in respect of any investment or class of investments which may be held by any bank, subject to such conditions as may be prescribed.
(4) Any bank which contravenes this section or fails to comply with any condition imposed or prescribed under this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $100,000 and, in the case of a continuing offence, to a further fine not exceeding $10,000 for every day or part of a day during which the offence continues after conviction.
(5) In this section, “equity investment” means any beneficial interest in the share capital of a company, and such other investment, interest or right as may be prescribed.
Major stake in entity
32.—(1) A bank in Singapore must not acquire or hold, directly or indirectly, a major stake in any entity without the prior approval of the Authority.[5/2016]
(2) The Authority must not grant its approval under subsection (1) if the entity carries on, whether as its principal business or otherwise, any prohibited business.[5/2016]
(3) Despite subsection (2), the Authority may, in a particular case that comes within that subsection, grant its approval if it is satisfied that approval should be granted by reason of the exceptional circumstances of the case.[5/2016]
(3A) An approval of the Authority under this section may be subject to such conditions as the Authority may determine, including any condition relating to the operations or activities of the entity concerned.[5/2016]
(3B) The Authority may at any time add to, vary or revoke any condition imposed under subsection (3A).
(4) This section does not apply to —(a)
any interest held by way of security for the purposes of a transaction entered into in the ordinary course of the business of the bank in Singapore;
(b)
any shareholding or interest acquired or held by a bank in Singapore in the course of satisfaction of debts due to it which is disposed of at the earliest suitable opportunity; and
(c)
such other interest as may be prescribed.
(5) The Authority may, by regulations —(a)
disapply this section to any entity or class of entities, subject to such conditions as may be prescribed;
(b)
provide for the manner of computation of major stakes; and
(c)
provide that any interest or control mentioned in the definition of “major stake” in subsection (7) that is acquired or held, directly or indirectly, by an entity in which a bank has, directly or indirectly, a major stake is to be treated as acquired or held by the bank.[5/2016]
(6) Any bank which contravenes this section or fails to comply with any condition imposed or prescribed under this section 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 of a day during which the offence continues after conviction.
(7) In this section —“company” means a company incorporated under the Companies Act 1967 or any corresponding previous written law, a company incorporated outside Singapore, or a VCC;[S 26/2022 wef 13/01/2022]
“entity” means any body corporate or unincorporate, whether incorporated, formed or established in or outside Singapore;
“limited liability partnership” has the meaning given by section 2(1) of the Limited Liability Partnerships Act 2005, and includes a limited liability partnership formed or established outside Singapore;
“major stake”, in relation to an entity, means —(a)
any beneficial interest exceeding 10% of the total number of issued shares (or, in the case of an umbrella VCC, either exceeding 10% of the total number of issued shares in the umbrella VCC that are not in respect of any of its sub-funds, or exceeding 10% of the total number of issued shares in the umbrella VCC in respect of any one of its sub-funds) or such other measure corresponding to shares in a company as may be prescribed;[S 26/2022 wef 13/01/2022]
(b)
control of over more than 10% of the voting power (or, in the case of an umbrella VCC, either more than 10% of the voting power in the umbrella VCC that is not in respect of any of its sub-funds, or more than 10% of the voting power in the umbrella VCC in respect of any one of its sub-funds) or such other measure corresponding to voting power in a company as may be prescribed; or[S 26/2022 wef 13/01/2022]
(c)
any interest in the entity, by reason of which the management of the entity is accustomed or under an obligation, whether formal or informal, to act in accordance with the bank’s directions, instructions or wishes, or where the bank is in a position to determine the policy of the entity;
“management”, in relation to an entity, means —(a)
if the entity is a company, its directors;
(b)
if the entity is a limited liability partnership, its partners or managers;
(c)
if the entity is any other partnership, its partners;
(d)
if the entity is a cooperative society, the members of its committee of management; or
(e)
if the entity is any other society, its officers,
and includes such other person of the entity as the Authority may prescribe;
“prohibited business” means any business other than the businesses mentioned in section 30(1)(a) to (d).[5/2016]
(8) This section does not affect any acquisition or holding of a major stake which was approved by the Authority before 18 July 2001.
Immovable property
33.—(1) A bank incorporated in Singapore must not acquire or hold interests in or rights over immovable property, wherever situated, the value of which exceeds in the aggregate 20% of the capital funds of the bank or such other percentage as the Authority may prescribe.[1/2020]
(1A) A bank incorporated outside Singapore must not, through a branch or office located within Singapore, acquire or hold any interest in or rights over immovable property, wherever situated, the value of which exceeds in the aggregate —(a)
any limit prescribed by the Authority; or
(b)
any limit specified by the Authority in a particular case by written notice to that branch or office.[1/2020]
(2) For the purposes of determining the aggregate value of the interest in or right over immovable property mentioned in subsection (1) or (1A), there is to be excluded such portion of the value as may be attributable to the following:(a)
any interest in or right over immovable property or any part thereof used for the purpose of conducting the business of the bank in Singapore or housing or providing amenities for its officers;
(b)
any interest in or right over immovable property held by way of security for the purposes of a transaction entered into in the ordinary course of the business of the bank in Singapore;
(c)
any interest in or right over immovable property held by way of enforcement of such security mentioned in paragraph (b), provided that it is disposed of at the earliest suitable opportunity; and
(d)
such other interest in or right over immovable property as the Authority may prescribe.[1/2020]
(3) The Authority may make regulations to provide for the manner of valuation or apportionment of immovable property for the purposes of this section.
(4) Any bank which contravenes subsection (1) or (1A) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $100,000 and, in the case of a continuing offence, to a further fine of $10,000 for every day or part of a day during which the offence continues after conviction.[1/2020]
Grace period for sections 30 to 33
34.—(1) Despite sections 30 to 33, where any business was carried on, or any property or investment was held, by a bank in Singapore immediately before 18 July 2001 with the approval of the Authority (where required) or which did not require the approval of the Authority, the bank may continue to carry on such business or hold such property or investment (as the case may be) for a period of 3 years from 18 July 2001.
(2) The Authority may, on application by a bank in Singapore, extend the period mentioned in subsection (1) for such further period as the Authority considers appropriate.
(3) The Authority may, in granting an application for extension under subsection (2) —(a)
levy a charge of an amount not exceeding $10,000 for every day of the period of extension; or
(b)
impose such conditions as it considers appropriate.
(4) The Authority may, on application by a bank in Singapore, waive any requirement in section 30, 31, 32 or 33, on such conditions as the Authority may impose, where in the opinion of the Authority, the waiver is reasonably necessary for the bank to divest the business, property or investment mentioned in subsection (1) by the end of the period mentioned in that subsection or the further period mentioned in subsection (2).
Exposure to immovable property sector
35.—(1) The Authority may make such regulations as may be necessary or expedient for the purposes of limiting, in relation to a bank in Singapore, exposure to risks associated, directly or indirectly, with such immovable property as may be prescribed.
(2) Without limiting subsection (1), the regulations may —(a)
prescribe a limit (called in this section the property sector exposure limit) —(i)
on the credit facilities that may be granted or issued by a bank in Singapore to such person or class of persons as may be prescribed; or
(ii)
on the notes, bonds, debentures, derivatives or other financial instruments that may be held by a bank in Singapore;
(b)
provide for the manner of computation for the purpose of determining whether the property sector exposure limit has been complied with;
(c)
provide for the Authority to vary the property sector exposure limit in the circumstances of any particular case;
(d)
provide for such transitional and consequential provisions as may be necessary or expedient; and
(e)
provide that a contravention of the regulations shall be an offence punishable, on conviction, with a fine not exceeding $100,000 and, in the case of a continuing offence, with a further fine of $10,000 for every day or part of a day during which the offence continues after conviction.
Source: Singapore Statutes Online (Attorney-General's Chambers), © Government of Singapore.
