Speech by Mr. Louis Ng Kok Kwang, MP for Nee Soon GRC at the Second Reading of the Monetary Authority of Singapore (Amendment) Bill [Bill No. 25/2017]
Madam, I trust it is common ground among us that financial institutions, or FIs, have to be responsible for themselves and towards their stakeholders and in the larger scheme of things, our society. Performing bailouts of FIs will not be a viable move for any responsible government.
In this regard, I stand in support of the Bill, which ushers in the adoption of Recovery and Resolution Planning, or RRP as we know it – which is already in place in the US, the EU, as well as in Japan and Hong Kong.
Implementation of Recovery Plans
I support the ability of the MAS to require a Recovery Plan from pertinent FIs and to instruct implementation of the Recovery Plan.
Can Minister clarify, when a Recovery Plan has been instructed to be implemented, which parties and persons other than the relevant employees of the pertinent FIs would be aware of the instruction to implement?
Is there any timeline for the FIs to develop and submit recovery plans, and if there are, how is the enforcement of the strict adherence to such timelines done?
Further, in the event that the recovery plans do not result in the desired outcome, are measures in place to ensure that the subsequent negative impact will not impair Singapore’s financial system.
Determination by the MAS to cancel or modify instruments
I support as well, the introduction of a bail-in regime where a distressed FI is rescued not by the taxpayers.
On this note, I hope to seek some clarifications. Can the Minister elaborate on the persons who may be appointed to perform an independent assessment stated in Section 73(3) where instruments may be cancelled or modified under the bail-in regime.
Would the Division 4A FI be consulted on the said appointment and would the Division 4A FI or the Authority be negotiating on the
remuneration and expenses of these persons.
Establishment and management of the Resolution Fund
In relation to the establishment of a Resolution Fund, I have several queries to make.
What criteria will the Minister be relying on to appoint a trustee of the Resolution Fund?
How will the Authority determine the loan quantum to constitute the fund? For how many years after the dissolution of a Resolution Fund, must the trustee keep proper accounts and records of transactions?
Also, could an indication of urgency “as soon as practicable” be inserted into Section 103(2), where any sum recovered from FIs under resolution must be paid into the Resolution Fund?
And why is the trustee given the discretion for deciding which medium to use for publishing a general notice in relation to the levy at Section 104.
Revision of MAS Paid-up Capital Amount
Next, as stated in the Explanatory Note of the Bill, Section 5 of the Act allows only for an increase in the Authority’s paid up capital with the approval of the Government.
The amendment is not only about allowing for a reduction of paidup capital. First, it results in requiring both the Government and the Board to agree. Second, the paid-up capital can be reduced and transferred to anywhere. In this regard, may I raise 3 queries.
First, why is there now a need to allow for the paid-up capital to be reduced? Second, why is the Government’s ability to approve and decide unilaterally replaced with the need for the Government to agree with the Board? Third, may I confirm that the proposed Section 5(4) allows paid-up capital from the MAS to be transferred to any entity?
Madam, again I congratulate the Minister for putting in place RRP in the Act. This affirms the mind-set change that we wish to see in financial institutions and also assures stakeholders that financial institutions in Singapore have plans in place when disasters strike.
I therefore stand in support of the Bill.