Singapore guns for IMF gold star

The first part of an external review of the stability of Singapore’s banking, insurance and securities sectors by the International Monetary Fund will wrap up this week, with a second onsite mission scheduled for later this year. The final report is expected by the end of 2013.

Singapore's report card will have a material impact on how global financial institutions regard the security of its markets, at a time when its government is concentrating its efforts on establishing Singapore as the hub of choice for banks and equity capital markets in the region.

An IMF team started its first review last month, probing its regulatory standards and banking system as part of a revamped Financial Sector Assessment Programme (FSAP). The Fund is putting key markets across the globe under a magnifying glass to identify any potential systemic risks early on to prevent a repeat of the global financial crisis four years ago. By the end of next year, it should have put all 25 of the most critical markets through the FSAP ringer.

Singapore last underwent an FSAP exercise in 2004. Ahead of the IMF mission, which kicked off in April, Singapore’s Monetary Authority (MAS) worked closely with the financial sector to prepare for the assessment

MAS says Singapore is confident that the country’s regulatory regime already meets or exceeds international norms. “This (regime) enabled us to weather the financial crisis relatively well.”

A MAS spokesman said that following the crisis, international regulatory standards had been raised and Singapore had been well placed to comply with them.

“For example, in 2011, MAS announced that Singapore-incorporated banks must meet Basel III capital requirements earlier than the Basel Committee’s schedule, and at a higher standard. MAS also enhanced the group-wide supervision framework for insurance groups as well as strengthening the regulatory regime for fund management companies in 2012.“

The FSAP was established in 1999, but drastically overhauled in 2010 after the 2008 financial markets collapse that plunged many economies into a recessionary crisis. It now plans to do FSAPs every five years on the key markets.