Economy & Finance
Banks in Singapore
Singapore is an important financial hub in Southeast Asia. The financial and insurance industries make a large contribution to the city state’s tertiary economy and offer various employment opportunities for the job search in Singapore. There is no shortage of banks in Singapore that cater to local customers, permanent residents, and foreign residents alike.
All banks in Singapore are subject to the Monetary Authority. It operates as a central bank for the tiny nation, as the financial agent of the government, and as a regulator for the local currency, finance, insurance, and securities. Moreover, any bank in Singapore is bound by the legal framework of the Banking Act. It applies to the various kinds of financial institutions active in the metropolis.
Different Types of Banks
When it comes to the different types of banks in Singapore, there are two major distinctions you need to make.
- Merchant banks vs. commercial banks: the 49 merchant banks deal with matters concerning corporate finance, mergers and acquisitions, management consultancy, and the like. They are not the go-to address for the average expat who wants to open a bank account. In that case, you need to refer to one of the over 100 commercial banks in Singapore.
- Local banks vs. foreign banks: as far as commercial banking is concerned, local regulations distinguish between Singaporean banks and foreign institutions. In addition to the six local corporations, there are several sub-categories for foreign banks: full foreign banks, qualifying full banks, wholesale banks, and offshore banks.
- Foreign banking firms: you don’t need to know the exact criteria for each category mentioned above. However, you should be aware of a couple of things. As the name implies, offshore banking offers only offshore accounts, obviously. Wholesale banks, on the other hand, provide a broad range of financial services. However, they are allowed to have just one main branch in Singapore, and they are forbidden from offering financial activities in Singaporean dollars. So, for practical reasons, an offshore bank or a wholesale bank in Singapore is probably not appropriate for your daily business.
Savings Accounts and Current Accounts
How do you proceed if you want to open an account with a bank in Singapore? First of all, you should know if you want a savings account as well as a regular bank account.
If you would like to open a savings account or refer to a bank in Singapore for wealth management will simply depend on your personal situation (assets, needs, planned length of stay, etc.). Unfortunately, it is beyond the scope of this article to give such detailed financial advice. We can but strongly recommend that you talk to your bank back home or to an independent advisor before moving to Singapore. There is definitely no lack of banks in Singapore that can provide various savings plans or investment schemes for foreign residents.
For everyday financial matters, like receiving salary, paying rent, or withdrawing cash, a current account (also called “chequing account”) is sufficient. However, though there is no limit on cash imports or transactions from abroad, you should not deposit large sums in this kind of account.
Current accounts have low interest rates or none at all, while Singapore has a fairly high inflation rate. In 2010, it was an estimated 2.8%, rising to over 5% in 2011. The interest on a current account does not even remotely equal the slow, but steady loss via inflation. Also, only bank deposits up to SGD 50,000 are covered by Singapore’s deposit insurance. Account deposits in foreign currency and offshore accounts are not insured at all.
In the second part of this article, we’ll tell you how to find a bank to best suit your needs and how to open an account.
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