Singapore sticks to digital banking plans despite China, US clampdowns

Regulatory tightening in China ‘will not have an impact’ on licence awards in the city state, said the Monetary Authority of Singapore’s Ravi Menon

The permits are much coveted given the city’s status as a regional financial hub and rapidly growing wealth management centre

2-MIN READ2-MIN

Ravi Menon, managing director of the Monetary Authority of Singapore, pictured after an interview at the central bank‘s headquarters on Tuesday. Photo: Bloomberg

Published: 9:31am, 25 Nov 2020Updated: 9:31am, 25 Nov 2020

Singapore’s financial regulator will stick with its plans to award digital banking licences by the end of the year, undeterred by tightening scrutiny in China and the US that is hitting major Chinese applicants.

“Regulatory tightening that’s happening in China will not have an impact on the digital banks here,” Ravi Menon, managing director of the Monetary Authority of Singapore, said in a recent interview. “It’s not our job to try to guess what the geopolitical situation might be like, what actions might be taken by other countries with respect to some of these entities.”

The permits are much coveted by Chinese firms and others, given the city’s status as a regional financial hub and rapidly growing wealth management centre. Billionaire Jack Ma’s Ant Group, among high-profile candidates vying for the permits, shelved its initial public offering after a clampdown and higher capital requirements imposed by Chinese regulators.

Ant Group’s logo is seen during the 2020 World Internet Conference in Wuzhen, China’s Zhejiang province, on November 23. Photo: Reuters

ByteDance, whose joint venture is another contender, has been hit by the US government’s order to sell its TikTok video app.

Singapore has its own requirements for digital bank licences that include the ability to provide good services with appropriate risk management, as well as a smooth exit strategy, Menon said, without confirming the identities of any applicants.

The Monetary Authority of Singapore is taking a progressive approach in regulating such firms, such as by restricting their ability to take deposits initially, before giving them permission to operate more freely once they prove profitability over time, Menon said.