Singapore’s private banking has grown tremendously over the last decade. Assets under management in Singapore’s private banks have grown to around 300 billion, 6 times what they were 10 years ago. Singapore is estimated to manage around 5% of global private wealth, while Swiss private banking manages around a quarter.

Singapore has benefited from strict banking secrecy regulations, as well as a rise in the number of Asian millionaires, especially the type who want to invest with private banks and financial instruments rather than property.

However, in response to demand from the G20 group of developed countries, Singapore has promised to rethink its top secret laws. Like Switzerland, Singapore has to walk a tightrope between maintaining its sovereignty and international acceptance of its laws and banks.

One of the reasons Singapore has grown is because it was already a large financial center in its own right. Unlike smaller tax havens and dependencies of other countries that have been accused of “inventing” laws to profit from capital flight, Singapore is a long-standing trade hub and hub for international financial deals.

There are several arguments in favor of Singapore keeping its privacy laws. Many private banking clients in Singapore are very powerful people among neighbors like China, Indonesia and Thailand. It is in their interest to ensure that Singapore’s banking secrecy is not relaxed. Furthermore, Singapore is an international financial center: it cannot be blackmailed in the same way as other jurisdictions.

However, Singapore has made concessions and does not necessarily see its future in harboring Western tax dodgers. Singapore has signed TIEAS with several countries and has committed to adopt Article 26 of the OECD model tax convention on the exchange of information on tax matters.

After Swiss bank secrecy came under the spotlight, it was widely reported that bankers were urging a massive capital flight to Singapore, where bank secrecy rules still held firm. But in reality, basing any structure on bank secrecy is like building a house on a fault line, it is bound to change. Instead, the smartest investors used techniques that don’t rely on bank secrecy in any particular country.

Savvy private banking clients now use different structures that operate independently of banking secrecy, such as investing through trusts or trust companies.

Furthermore, the reasons for banking in an offshore center like Switzerland are not totally dependent on taxes. In fact, the main reason is security. Hundreds of banks have been going under in the US, not in Switzerland. Investors are also escaping currency devaluations, civil forfeiture, and frivolous lawsuits.

Singapore’s wealth management is certainly growing in sophistication, but it is still in a learning phase. In the mid-2000s, when Singapore’s private banking industry was growing rapidly, it was alleged that there were not enough bankers to meet demand. Instead, private banks in Singapore were employing local hairdressers and car salesmen with good interpersonal skills and turning them into private bankers.

Private banking in Singapore follows the model of Swiss private banking, even down to its family trust law. In terms of weathering geopolitical events like the war on bank secrecy, Singapore may also have to follow Switzerland’s example.