Magazine article Business Asia

Singapore Banks Go for Broke

Magazine article Business Asia

Singapore Banks Go for Broke

Article excerpt

Singapore's cash-rich banks -- led by industry leaders such as the United Overseas Bank (UOB) and the Development Bank of Singapore -- have gone on the offensive as their South East Asian counterparts bunker down.

UOB this month spent US$388 million to acquire 75 per cent of Thailand's troubled Radanasin Bank. It also plans to take a 60 per cent share in Westmont Bank in the Philippines.

In 1997, the Development Bank of Singapore (DBS), the largest bank in South East Asia, became Singapore's first bank to make an overseas acquisition by grabbing a majority stake in Bangkok-based Thai Danu Bank. It subsequently took control of other banks in the Philippines and Hong Kong.

Industry analysts say the takeovers are a further sign that healthy Singapore banks are moving in on their troubled neighbouring banks, which are groaning under the burden of non-performing loans.

Another Singapore bank, Overseas Union Bank (OUB), is also eyeing overseas expansion to offset the limited potential for growth in Singapore's mature market.

A five-year liberalisation program in Singapore means the city state's leading banks will be exposed to increased foreign competition.

The Goh Government this month granted qualifying full bank (QFB) privileges to four foreign banks: ABN Amro, Banque Nationale de Paris (BNP), Citibank and Standard Chartered Bank. This allows them to open more branches and have offsite ATM's.

David Tan Guan Huat, vice-president and head of corporate planning and risk management at OUB, said the bank's overseas expansion plans had been in the pipeline for years.

"We didn't really wait for this QFB or this market liberalisation or this (Asian) crisis. If we'd waited, I think it would have been too late", he said.

Tan said OUB knew as far back as 1992 that it had to move beyond Singapore.

In 1992, the bank garnered 20 per cent of its earnings from overseas -- a figure which rose to about 40 per cent pre-crisis before dropping back to about 35 per cent in the past year. …

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