Do senior bank staff, including non-executive directors, have to be registered with your national regulatory authority?

Locally incorporated banks are currently required to obtain the Monetary Authority of Singapore (MAS)’ prior approval for the appointment of their directors, chief executive officers, deputy chief executive officers, chief financial officers and chief risk officers. MAS' approval is similarly required for the appointment of the chief executive officers and deputy chief executive officers of banks incorporated outside Singapore. In deciding whether to approve their appointments, a key factor that MAS takes into consideration is whether they are fit and proper to hold office in accordance with MAS’ Guidelines on Fit and Proper Criteria (FSG-G01) (the Guidelines).

If your national regulatory authority requires registration of senior bank staff what are the requirements?

As stated in MAS’ Guidelines, the criteria that MAS takes into account in considering whether a person is fit and proper include the following:

  1. honesty, integrity and reputation;
  2. competence and capability; and
  3. financial soundness.

The onus is on each relevant person to establish that he or she is a fit and proper person rather than for MAS to show otherwise.

When assessing an application for the appointment of a relevant person to senior or critical functions, MAS may, in addition to the fit and proper criteria set out in the Guidelines, consider other factors that may be relevant, such as whether the relevant person has a good standing in the profession in respect of which the application is submitted.

Is there legislation specific to the banking sector that provides for penalties to be levied against senior staff for mis-managing a bank?

There are no specific regulations regarding mis-management. However, the Banking Act (Cap 19 of Singapore) (BA) provides (among other offenses) that any director or executive officer of a bank in Singapore who fails to take all reasonable steps to secure compliance by the bank with any provision of the BA or any other written law applicable to banks in Singapore shall, if such failure is not already an offense under any other provision of the BA, be guilty of an offence and shall be liable on conviction to a fine not exceeding S$125,000 or to imprisonment for a term not exceeding 3 years or to both.

What is the maximum amount the regulator can fine an individual?

The maximum amount MAS can fine an individual is S$125,000 per offense under the BA. MAS may in its discretion compound any offense prescribed as a compoundable offense.

Is there legislation in place that requires banks to have in place remuneration policies and practices that are consistent with effective risk management?

There are no specific regulations on this. However, the Guidelines on Corporate Governance for Financial Holding Companies, Banks, Direct Insurers, Reinsurers and Captive Insurers Which are Incorporated in Singapore (issued April 3, 2013) (Corporate Governance Guidelines) provides that the board of directors is responsible for the governance of risk. The board should ensure that management of the bank maintains a sound system of risk management and internal controls, including financial, operational, compliance and information technology controls.

The Corporate Governance Guidelines prescribes that a bank must have a Remuneration Committee (RC) which is appointed by the board of the bank and comprises at least three directors, the majority of whom, including the RC Chairman, should be independent. All of the members of the RC should be non-executive directors. The RC should review and recommend to the board a general framework of remuneration for the board and key management personnel. If necessary, the RC should seek expert advice inside and/or outside the company on remuneration of all directors. The bank should also provide clear disclosure of its remuneration policies, level and mix of remuneration, and the procedure for setting remuneration, in the company's annual report.

Is there any legislation planned in your jurisdiction that will strengthen the accountability of senior bank staff?

MAS has in recent years published notices requiring directors and senior management to ensure compliance with anti-money laundering and countering the financing of terrorism (AML/CFT) laws, regulations and notices. In this regard, a bank’s directors and senior management are responsible and held accountable for implementing strong governance and sound AML/CFT risk management and controls. Banks have also been asked to incorporate the Total Debt Service Ratio (TDSR) in their credit assessment framework for property loans, to ensure that property loans granted are commensurate with the bank’s risk appetite. Any deviation from the TDSR threshold of 60 percent would have to be subject to enhanced credit evaluation and the policies and procedures relating to such enhanced credit evaluation would require approval from the bank’s board of directors. There has been a concerted effort from MAS to streamline and codify its expectations within the BA, consolidating input from the various notices that have been published over the years.