Could the Silicon Valley Bank incident have a significant impact on banks in Singapore?
According to recent reports, Silicon Valley Bank, a prominent US bank that has historically been a strong supporter of tech startups, collapsed on March 10, 2023. However, the bank's depositors have been reassured by the US Federal Reserve that they will be able to recover all of their funds. This news has left many small and medium-sized business owners and tech startups wondering if their funds are safe in their Singaporean bank.
Fortunately, the likelihood of a similar collapse occurring in Singapore is low! The Monetary Authority of Singapore (MAS), which serves as the nation's central bank, is in charge of Singapore's solid and well-regulated financial sector. The MAS has put in place stringent rules and capital requirements in an effort to protect the resilience and stability of Singapore's banking sector.
What you Need to Know about Singaporean Banks
1. Insured banking - The Singapore Deposit Insurance Corporation (SDIC), which oversees the Deposit Insurance Scheme (DIS), offers coverage of up to SGD 75,000 per depositor per Scheme member in Singapore. All Singapore dollar and foreign currency deposits, including savings, current, fixed deposit, and other deposit accounts, are covered by this policy.
It's crucial to understand that the DIS is not a separate insurance plan that you must buy. Instead, it is a legal plan that automatically protects all SDIC Scheme members' depositors. As long as their deposits are kept in a bank that is a member of the DIS, non-Singaporeans are likewise covered.
2. Stable banking options - The three biggest banks in Singapore are UOB, OCBC, and DBS, routinely rank among the best banks in the world for strength and stability. DBS was named the world's strongest bank for the third year in a row in a recent assessment by The Banker, while UOB and OCBC were ranked sixth and seventh, respectively.
3. Stable policies and economy - Singapore's business-friendly policies, stable economy, and government's quick actions to safeguard the financial system contribute to its reputation as a secure and attractive business environment.
In the past, the Singaporean government has acted quickly to safeguard the stability of the financial system. The government has the power to fund the banking system in the case of a bank failure and to guarantee deposits through the SDIC. This is consistent with the government's dedication to preserving Singapore's standing as a secure and alluring business environment.
In conclusion
Singaporean banks have continuously ranked among the strongest and most stable in the world. In fact, four Singaporean banks were listed as among the top 10 strongest banks worldwide in a recent analysis by The Banker.
The demise of Silicon Valley Bank was a unique episode, and it is unlikely that Singaporean banks will experience a similar demise. Singapore's strong banking infrastructure and tight rules provide depositors peace of mind that their money is secure.