Singapore: MAS proposes significant amendments to related party transaction requirements for banks

The MAS has published a Consultation Paper on Proposed Amendments to Related Party Transaction Requirements for Banks. The proposed amendments aim to enhance oversight of related party transactions (“RPTs”), to address risks of conflict of interest and to align with international best practices including the updated Core Principles of Effective Banking Supervision issued by the Basel Committee on Banking Supervision. 

There has previously been extensive industry discussion on whether and to what extent intragroup transactions should be subject to these requirements. MAS is proposing to tighten the scope of this exclusion (point 1B below) and so we expect this proposed change in particular will ignite more industry debate.

It will be key for banks operating in Singapore to carefully review these proposals and assess the impact on their current RPT frameworks, governance processes, and exposure management practices. At least some of these changes will impact branches of foreign-incorporated banks (as well as Singapore-incorporated banks).

MAS proposes coordinated amendments across three Notices: MAS Notice 643, MAS Notice 643A and MAS Notice 656.

Key Proposals

1. MAS Notice 643 – Transactions with Related Parties

A. Expanded definition of related parties

MAS proposes to introduce two new types of “related parties”:

1. the “extended senior management group” and the “extended director group”, who will include persons that can exert significant influence over the bank’s executive officers or directors; and 

2. the “indirect controller group” (only applicable to Singapore-incorporated banks), which will include persons whose directions, instructions or wishes with which the directors of the bank are accustomed or obliged to act in accordance with (whether formally or informally), or who are in a position to determine the bank’s policies (and their affiliates and family members). 

B. Refined scope of excluded intragroup transactions

Currently, MAS Notice 643 excludes certain intragroup transactions from RPT governance requirements, including:

1. transactions arising from central risk or liquidity management functions or pertaining to centrally coordinated services, which are excluded from all RPT governance requirements; and

2. all intragroup write-offs and material transactions, which are excluded from the requirement to obtain special board approval.

MAS has proposed to tighten the scope of these exclusions, such that they only apply to entities that are part of the bank group, the parent bank group, or holding company group, provided that the holding company is subject to minimum prudential standards and supervision on a consolidated basis by a bank regulatory agency. This approach will mean that RPT governance requirements will apply to transactions with related parties that sit outside the prudentially supervised group structure, aligning with Basel Core Principles on group-wide risk management. 

The policy reason for this change is that bank groups are subject to consolidated supervision and group-wide risk management, unlike entities within the group but outside the bank group. However, given the large number of intragroup transactions typically existing between banks and other entities in the group, we expect industry may have strong views on this proposal and will need to consider to what extent it impacts them.

C. New exposure limits on related party transactions

In order to streamline and consolidate the RPT requirements, MAS has proposed moving existing limits on a Singapore-incorporated bank’s exposures to a substantial shareholder group and major stake entity group from MAS Notice 656 to MAS Notice 643.

MAS has also proposed enhancing the limit framework to more comprehensively capture and limit potential losses from each related party group, for example, a Singapore-incorporated bank must ensure its exposures to certain related party groups does not exceed 25% of Tier 1 capital.

2. MAS Notice 643A – Exposures and Credit Facilities to Related Concerns and MAS Notice 656 – Large Exposures

MAS has proposed making some consequential changes to these notices, to reflect the changes outlined above. In addition, MAS has proposed some changes to the submission timelines and governance of the statements for related party exposures in Notice 643A.

Next steps

The consultation closes on 14 November 2025 and MAS is aiming for the proposed amendments to be effective from 30 November 2026, or at least six months from the issuance of MAS Notice 643, whichever is later.