Parallel Presentation

The New People’s

Bank: Ending On A High

Note.

“Globalization will make our societies more creative and prosperous, but also more vulnerable”

- Lord Robertson

Parallel Presentation

Financial Globalization

•Intensive cross border financial and payment flow

•Broad array of financial instruments

•Greater international risk-sharing.

•International profile of financial participants enhance our development as a financial hub

•Integrated markets

• Provides a greater range of job opportunities

• Cheaper source of financing

• Deeper, more liquid markets

• Platform for countries to work together

Gains from Financial Globalisation

Singapore’s Financial Liberalization Roadmap

Disclosure based regime

Greaterleeway in financial

innovation

Financial Liberalisation

1998

Bank

ing

Cons

olid

atio

n

Qualifying Full Bank (QFB)

scheme Encourage

strong local banks

1999 2001 2002

Inve

stor

s ta

ke

resp

onsi

bilit

y fo

r th

eir

deci

sion

s

Inte

nsify

Com

petition

Singapore’s Achievements

Premier Asset Management Centre with assets worth approximately S$ 1

trillion

Second largest over-the-counter derivatives

trading centre in

Asia

Top 5 most active foreign

exchange trading

centres in the world

Growing wealth management hub of the East

Singapore Financial

Hub

Impact of Financial Globalisation on Local Banks

• Shift from bank-centered to market-based financing resulting in decline in banks’ core business areas

• Issue of QFB licences to foreign banks leading to intense competition at the retail level

Government•Need to embrace financial innovation

•Balance between regulation and empowering investors

Financial Institutions

•Intense competition resulting in need to follow other banks •Cater to client needs•Additional revenue stream

Why Sell Complex Financial Products?

Investors•Enhanced investor choice

•Better returns albeit with higher risk

•Maybe suitable for a select group of educated investors

Angry Investors Flood Speaker's Corner seeking redress

1st Video Presentation

Existing Financial Education

Multi-agency Financial Education Steering Committee

MoneySENSE–National financial education programme launched

in 2003–Comprise of basic money management, financial

planning and investment know-how

Short courses/seminars are also available –Singapore Exchange, SGX–Security Investors Association (Singapore), SIAS–NTUC, etc

DBS 'High Notes 5' Investors:They pumped in life savings and now feel cheated.

Investor Education• Many consumers/sellers do not understand financial products that they deal with.• This has led to cases where retirees lost all of their savings, and also, young educated financial professionals who are unsure of the financial products they are sell.

Tue, Dec 23, 2008AsiaOne

Lone protestor's plea: 'Return my medical fee'

SKIT 1

Skit 1

2nd Video Presentation

MAS Proposed New Guidelines On Investment Products Sales

On CD rom

SKIT 2

Skit 2

Revised MAS guidelines

Short, Short, user-friendly user-friendly

Product Product Highlights Highlights Sheet to Sheet to

promote more promote more effective effective disclosuredisclosure

Health Health warning warning

to accompany to accompany complex complex financial financial productsproducts

Stop bank tellers from referring Stop bank tellers from referring customers to financial advisors to customers to financial advisors to

sell investment productssell investment products

More MAS leeway to go after More MAS leeway to go after errant financial institutionserrant financial institutions

Better retail investor protection

Rebuilding Relationships with Local Clientele

What more can banks do?

Investment Product

Introduce easy-to-understand financial products

Transparent marketing techniques

Sales ProcessBetter alignment

of incentives structure

Ethical, knowledgeable and trustworthy

sales staff

Rebuilding Relationships with Local Clientele

What more can banks do?

InvestorEducation

Conduct regular financial seminars

Distribute clear financial brochures

CorporateStrategy

Embark on re-branding strategy to restore client confidence

Refocus corporate culture on fair trading

with customers

A Fine Balancing Act

Financial Regulation

Financial Development

Singapore Status as a Financial Hub

Conclusion

• It is the job of the MAS to regulate the finance industry.

• However, over-regulation would lead to a disintegration of the sovereignty of the sector.

• What is needed is "smarter regulation" that will neither constrain choice nor innovation but make transparent the consequences of different choices in the financial system