Singapore pressures Digibanks in the face of US and China crackdown

Singapore’s financial regulator will stick with its plans to grant digital banking licenses before the end of the year, undaunted by increased scrutiny in China and the United States that is hitting major Chinese applicants.

“The regulatory tightening that is happening in China will not have an impact on digital banks here,” said Ravi Menon, managing director of the Monetary Authority of Singapore, in an interview ahead of the annual meeting in Singapore. fintech festival that starts on December 7. “It is not our job to try to guess what the geopolitical situation might be like, what actions other countries might take with respect to some of these entities.”

Permits are highly coveted by Chinese companies and others, given the city’s status as a rapidly growing regional financial center and wealth management center. Billionaire Jack Mas Ant Group Co., among high-profile candidates vying for permits, shelved its initial public offering after a crackdown and higher capital requirements imposed by Chinese regulators. Up to five licenses will be awarded from a list of 14 eligible candidates.

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

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

‘Different place’

MAS is taking a progressive approach to regulating these companies, such as restricting their ability to receive deposits initially, before giving them permission to operate more freely once they demonstrate profitability over time, Menon said.

“China started from a different place, initially it did not regulate many of these fintech entities to their full extent,” he said. “And now the authorities are converging towards the same position as most of the rest of the world. I think that’s the right thing to do and creates a level playing field. “

Read why DBS welcomes China’s crackdown on fintech

When asked if government relations would play a role in the regulator’s decision-making on digital banking licenses, Menon dismissed any favoritism, saying it is “strictly based on merit.”

“We will not penalize the banks of any country because of the sanctions they may be in,” he said. “Nor do we give favorable treatment to banks in any country due to good relations.”

Chinese contest

TikTok, one of the most popular apps in the world, got a two-week extension on the November 12 deadline to sell its business in the United States while the United States assesses whether it poses a threat to national security.