By Fiona Chan & Gabriel Chen
TWO local banks - not three - may be the right number for
Singapore, so that they can expand both locally and overseas in a
meaningful way, Minister Mentor Lee Kuan Yew said last night.
'I would have preferred personally that there be only two banks,
because I don't think Singapore is big enough for three banks,' he
told 600 bankers gathered at the Shangri-La ballroom for the 37th
annual Association of Banks in Singapore (ABS) dinner.
'But neither OCBC nor UOB was going to combine or be taken over
by DBS, so we're left with (three) but I think in the end, there
must be further consolidation.' He added: 'You can't go abroad in a
big way because there's a limit to what you can do in the Singapore
market, and you need a big solid bank with the capabilities and the
capital to debt ratios to go abroad.'
Identifying China and India as huge potential markets in which
Singaporean banks can grow, as well as smaller markets in Indonesia
and Malaysia, Mr Lee said: 'I don't see three banks as capable of
making that foray as two banks, maybe eventually one bank.'
'I mean, you just look at the capitalisation of the big banks in
the US and then you look here,' he added.
Singapore's banking scene already underwent a period of
consolidation in the late 1990s, when the number of local banks
dwindled from seven to the present three. This came after the
Government decided to let foreign banks have greater freedom to
operate in the local market, in order to increase the standards of
the banking industry.
Read the full story in Saturday's edition of The Straits
Times.
