The increase in margins was particularly pronounced in 2008, but was lower in 2009, as illustrated by Chart 3. Besides the increase in margins, the non-interest terms and conditions of bank loans were also tightened considerably by banks. As examples, let me mention the increasing collateral requirements and loan covenants, as well as rises in noninterest charges. This is in line with evidence from a survey on the access to finance of SMEs in the euro area, which I will shortly discuss in more detail. However, I would like to mention at this point the results of the SME survey with respect to the development of the terms and conditions of bank loans in the first half of 2009. The bank lending survey and the survey on SMEs’ access to finance present an overall similar picture. For the first half of 2009, euro area SMEs point especially to a deterioration in the noninterest terms and conditions, such as charges, fees and commissions. In addition, a considerable net share of SMEs reported an increase in collateral requirements and other non-price terms and conditions, such as loan covenants and information requirements. This reported deterioration was, in net terms, much higher than that observed for interest rates. Italian SMEs also reported a tightening of non-interest terms and conditions, but – by contrast with average developments in the euro area as a whole – they reported a slight decline in interest rates.
The banking system in Singapore is well-placed to ride the current soft patch in economic conditions. •  First, banks in Singapore are well provisioned against potential losses. The banking system has set aside provisions to cover more than 100% of its NPLs. •  Second, the major banks in Singapore have sufficient liquid assets to meet continuous cash outflows over a 30-day period of high stress. •  Third, MAS’ annual industry-wide stress tests indicate that the banking system would remain resilient under very severe stress scenarios. Banks incorporated in Singapore have healthy capital buffers that are able to absorb the losses that are likely to occur under these severe scenarios. Banks in Singapore are also able to meet liquidity and funding needs under these extreme scenarios. 4  BIS central bankers’ speeches  The financial centre: clean and trusted The growth of our financial centre has been underpinned by Singapore’s reputation as a clean and trusted jurisdiction. Upholding high standards of integrity in the financial industry is an absolute priority for MAS. There can be no compromise on this. This means having an effective regime against financial misconduct and misdemeanours, and money laundering and terrorism financing. These threats have escalated in recent years as our financial centre grew in scale, sophistication, and connectedness with the rest of the world. Take financial misconduct. You would recall the widespread manipulation of interest rate benchmarks by errant traders across the world’s major financial centres in the aftermath of the financial crisis. And it happened here too.