(Repeats story published late on Friday)
* Digital bank licences mark liberalisation in sector
* Singapore to initially offer two digital full bank licences
* Asia's non-banking firms keen to challenge traditional banks
* Hong Kong began issuing licences earlier this year
By Anshuman Daga
SINGAPORE, June 28 (Reuters) - Singapore's central bank plans to issue up to five digital bank licences to suitable applicants, in a move that could deliver the biggest shake-up in two decades in a market dominated by local banks.
"The new digital bank licences mark the next chapter in Singapore's banking liberalisation journey," said Tharman Shanmugaratnam, senior minister and chairman of the Monetary Authority of Singapore (MAS).
"We welcome firms with innovative value propositions to apply for the digital bank licences, even if they have not yet established a track record in banking," Shanmugaratnam said at an annual event of the Association of Banks in Singapore.
Asia's non-banking firms are keen to challenge traditional banks by leveraging their technology and their user databases to offer banking services to retail customers and small businesses.
Singapore's banking market is dominated by DBS Group Holdings Ltd, Oversea-Chinese Banking Corp and United Overseas Bank Ltd.
Earlier this month, Reuters cited sources as saying that ride-hailing company Grab is close to hiring a consultancy to advise it on its banking potential and is gearing up to apply for a digital-only bank licence in Singapore.
Global financial technology players are among other groups expected to seek licences in Singapore, with some of them looking to form joint ventures, Reuters reported.
"The far-reaching effects of digitalisation are stimulating a fundamental re-think of the role of banks, in most advanced financial centres," Shanmugaratnam said.
"We are starting with two digital full bank licences, so as not to fragment Singapore's small domestic retail banking market," he said.
MAS expects to invite applications in August.
Shanmugaratnam said a digital full bank will start as a restricted digital bank to build up its business model and internal processes, and gradually progress to become a full functioning full bank.
Hong Kong, Singapore's fierce financial centre rival, began issuing licences earlier this year.
In Hong Kong, affiliates of Alibaba Group Holding Ltd and Xiaomi Corp, and consortia led by Standard Chartered PLC and BOC Hong Kong Holdings Ltd were among those who won the digital-only banking licences.
The MAS said in a statement that it will issue up to two full digital bank licences to companies headquartered in Singapore and controlled by Singaporeans.
Foreign firms are eligible for these licences if they form a joint venture with a Singapore company, and the venture meets the headquarter and control requirements.
The central bank will also issue up to three digital wholesale bank licences which will be open to both local and foreign players.
Digital wholesale banks will not be allowed to take Singapore deposits from individuals, except for fixed deposits of at least S$250,000 and will be permitted to maintain deposit accounts for corporate and small and medium enterprises. (Reporting by Anshuman Daga; Editing by Jan Harvey and Louise Heavens)