Prospects for Singapore's financial sector brighten,
says SM Goh
SINGAPORE : Senior Minister Goh Chong Tong has expressed
guarded optimism about the future of Singapore's financial
sector.
Speaking at the 36th annual dinner of the Association of
Banks on Friday, he noted that economic and financial indicators
have started stabilising in recent months. But the senior minister
also noted that downside risks remained.
Giving updated numbers, he also revealed that 3,600
investors who bought Lehman mini-bonds have been offered
settlements, totalling more than S$100 million.
Shortly after the Lehman Brothers debacle in September last year,
the global financial sector went into a tailspin.
Still, while Singapore's financial institutions weathered the
crisis well, a significant number of Singaporeans suffered losses
from having bought structured products related to Lehman. And many
who had invested much of their life savings in the mini-bonds found
that they were worthless.
Mr Goh said that as at end-May, more than 3,600 investors have been
offered settlement worth a total of S$105 million on a
no-admission-of-liability-basis. That is about two-thirds of all
cases that had been decided - including 25 per cent who received
full compensation.
More details are expected soon when the Monetary Authority of
Singapore (MAS) releases the findings of its completed
investigations. Broadly speaking though, Mr Goh, who is also
Chairman of MAS, said financial institutions will need changes to
both their business models as well as mindsets to win back the
trust and confidence of consumers.
Mr Goh said: "We must not waste the current crisis. Whether as
financial institutions, regulators or as consumers, this downturn
has not only taught us new lessons, but also presented
opportunities for the nimble and prepared."
Going forward though, Mr Goh said the sector needed to build on its
talent pool and tap on the opportunities arising from the massive
infrastructure needs and growing wealth in Asia.
He also said that Asian banks have emerged stronger. The financial
sector has developed further in the past years, and while risks
remain, the opportunities are certainly there.
Mr Goh said: "Rapid urbanisation will bring about more
infrastructure projects, which can spur the growth of project
financing in Asia. Demographic trends in Asia are expected to drive
the demand for greater wealth planning, including asset management,
as well as life and healthcare insurance products.
"Also, growing trade within Asia and with the rest of the
world will drive financing opportunities."
Meanwhile, as investors shift towards demanding less complex and
more transparent investment instruments, authorities are working to
improve access to Singapore Government Securities (SGS), generally
considered a liquid and safe investment alternative.
From next month, individuals can submit bids for these securities
through ATMs. Eventually, such SGS could be listed on the Singapore
Exchange to be traded, just like other stocks.
Mr Goh said: "By making SGS more accessible and more liquid, we
hope to enhance the array of financial instruments that financial
advisors can use to match their clients' needs."
In Singapore, such SGS are not used to fund government
expenditures. Instead it works as a useful pricing benchmark for
local corporations issuing bonds.
To further strengthen the financial sector, Singapore's central
bank is now looking into enhancing the framework for the fixing of
inter-bank rates.
- CNA/ms
