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(Post 1551 of 1951)   06/29/2001.09:22:27
Author :
UOB Merger with OUB. then Aquire KCH. so.....

(Post 1552 of 1951)   06/29/2001.09:33:42
Author :
I think DBS not going to give up without a fight. Face is extremely important to Ang Mohs, Banana and Mamaks, especially after spending a small fortune on presumptous adverts. Also, they are denied access to Malaysian network, which I suspect they desperately need to have. Otherwise, they have to run advert with tagline "Asia's Leading Regional Bank (Minus Malaysia)". Look quite goondu.

(Post 1553 of 1951)   06/29/2001.09:35:44
Author :
Adamsmith. Great!! I hope it's UOB-OUB...new coy called united overseas union bank. hahaha....just joking. man....hope this deal goes thru and put that bastxxx dbs as no.2.

(Post 1554 of 1951)   06/29/2001.09:38:39
Author :
UOB-0UB. DBS since already eaten up DHB not keen on OUB. UOB hand has been moved to take over OUB. Great deal.

(Post 1555 of 1951)   06/29/2001.09:47:16
Author :
Well done Mr Wee, choose wisely.....time for the private sector to lick those government servants at DBS properly.

I hope you win, but dont be a Ong Beng Seng in Vickers Capital.
then again DBS never really cared about the man in the street either.

(Post 1556 of 1951)   06/29/2001.09:49:31
Author :
OUB-UOB merger is in my opinion a done deal. UOB will not give DBS a chance to counter offer. OUB prefers UOB marriage rather than DBS as OUB and UOB will share power and promise of no staff reduction. The Lien family will be pleased will the deal. If acquired by DBS heads will roll.

After this merger, UOB will also bring KepCap into its fold. UOB is also talking to KepCorp at the same time. KepCorp will acquire UOLand though UOLand's share in UOB needs tidy up. The latter is a small issue.


(Post 1557 of 1951)   06/29/2001.09:50:30
Author :
Do not be euphoric over Wee's offer yet. DBS price is steadily rising. The permutation will change. Is DBS & OUB a foregone conclusion and OCBC & Kepcap vs UOB far fetched? UOB had ample time and failed to move. SM indicated that local banks were successful because they were protected. That's what happen when you get too big for your shoes.

(Post 1558 of 1951)   06/29/2001.09:50:47
Author :
this one i heard is sexy.

BNP was denied OUB.

UOB and BNP( as a strategic partner) can bid for OUB
OUB can go for Kep Cap.. ( i Mean Kep Cap is still here)

Isnt something bullish what all investors want to hear?

(Post 1559 of 1951)   06/29/2001.09:59:37
Author :
It has been made known publicly that the government will not allow foreign banks to take over local banks. PNB's quite proposal to take over of OUB earlier would not be allowed and therefore PNB's denial.

(Post 1560 of 1951)   06/29/2001.10:19:52
Author :
in my opinion, OCBC and Kep Cap is a done deal. Why dp you think directors are selling when Kep Cap was higher then offer price by OCBC??? Means the OCBC-Kep deal will go through.

This means to say UOB will not go for Kep Cap. OUB and UOB will merge, and DBS will be left a loner. In fact, i strongly think DBS's move is a smoke screen to force UOB to show hand. So there you have it, last man standing are DBS, OCBC and UOB.

(Post 1561 of 1951)   06/29/2001.10:25:56
Author :
Other reasons to support my reasoning:

DBS hostile. UOB friendly.
DBS suspension not the same time as OUB, thus shows lack of understanding there. UOB and OUB shares were suspended at the SAME time. Friendly move to shove off DBS.

(Post 1562 of 1951)   06/29/2001.10:27:25
Author :
If OUE merge with UOB, and OCBC takeover KCH, then who will be the second largest bank?
Dont think OCBC can get 3.38 for KCH really.
What if OUB merge with UOB and bid for KCH?

(Post 1563 of 1951)   06/29/2001.10:54:30
Author :
Will DBS end up being the 'lamp-post' ? Can anybody cast some light ?

DJ Singapore's UOB Bk/OUB/Press Conference-3 etails Pending
Source : Dow Jones 29/06/2001 10:49

A spokeswoman at OUB Bank told Dow Jones Newswires that it is "very highly likely" that the bank will participate in UOB's press conference scheduled later Friday.

However, she declined to say which OUB representatives will join the press conference.

She said the details of the likely joint press conference between the two banks "are being finalized."

- - 29/06/01 02-49G

(END) Dow Jones Newswires 29-06-01 0249GMT

(Post 1564 of 1951)   06/29/2001.10:59:35
Author :
Waiting...11 am, press release clear the air

(Post 1565 of 1951)   06/29/2001.11:00:51
Author :
Think that there is a possiblility that OUB & UOB will counter bid for KepCapital.

Glad that the two families decided to sit down, put the differences aside and thrash DBS!

(Post 1566 of 1951)   06/29/2001.11:08:26
Author :
How to heed your advice on OUB??
You cannot assume we have unlimited amount of money. You picks 2 counters per day, 5 to 6 counters sometimes, very soon you are going to ask us to buy every counter listed.
How can we keep buying before we see profit of yr earlier picks?
So far I found you are no different from any other chartist. Your failure rate is as high as good calls.

We can open an account with All brokers in Singapore and access their research, daily update, news and rumours FREE OF CHARGE and without a single trade.

The main point is: you shouldn't assume we have infinite amount of money. You may want to set a limit like HC Fund, ZeroOne fund...of SI.

Sincerely yours,

(Post 1567 of 1951)   06/29/2001.11:20:29
Author :
Looks like getting better by the minute.

Tonight is the Association of Bank's dinner.
Guess the UOB board would be sitting with the chaps from OUB.

Keppel Cap diners would refuse to sit with the OCBC bankers.
and DBS? hmnnn....

Wonder what Lee Hsien Loong gonna say to UOB-OUB

(Post 1568 of 1951)   06/29/2001.11:27:13
Author :
Research reproduced with permission from Millennium Securities.

UOB and OUB suspended

UOB and OUB were reported in the papers as having talks before the suspension. Also, UOB-KayHian were told to stopped trading in Keppel Capital shares by UOB bank. The difference in the UOB-OUB suspension is that both counters had been suspended at the same time. Whereas the OCBC-Keppel capital offer was after trading hours and DBS-OUB offer was suspended at different time, a near 10 minutes apart


UOB may have decided that Keppel Capital Capital is not worth taking over as widely expected by market. Keppel Capital being the smallest bank in Singapore is simply not worth the hassle, plus the fact that even if UOB manages to acquire Keppel Capital, UOB would not secure its No.2 position in Singapore. This is because OCBC has the cash and enough capital to raise funds to acquire OUB. Assuming this happens, UOB-Keppel (S$92.3b total Asets) would then still become the smallest bank in Singapore, with OCBC-OUB (S$106.3b in Total Assets) as No.2 and DBS-Dao Heng (S$145.7b in total assets) as No.1.

Therefore, why not acquire OUB bank and be certain of a N0.2 position in Singapore, see below,


The rationale is also that UOB does not have enough cash and debt raising capabilities as OCBC and can only have one major acquisition. See below for CAR ratio which determines the debt raising capabilities of banks.

With a strong CAR ratio, means that the bank would be better buffered
against any financial adversity and thus a higher credit rating and thus better able to raise debt.


We estimate that UOB had slightly over S$1b in spare cash and therefore would need to have a cash and share offer for OUB.
We do not believe that UOB would dilute more than 50% of its 1,052.7 issued shares as DBS would have a dilution of 50% on its 1,216 issued
shares- that is the 606m new DBS shares.

Assuming that UOB offers a total consideration of S$9,815.8 for OUB bank based on paying 1.9x price/book ratio for OUB's book value of S$5.20. See workings below. If UOB offers 0.5 UOB shares for every 1 OUB shares, based on UOB's pre-suspension price of S$11.50, this works out to be 0.5 x 993.5 outstanding shares of OUB x UOB last price of S$11.50 = S$5,712.3m

The effect would be as below,


The remainder of S$4,100m would be through internal fundings of excess
cash of approx S$1b and the rest through debt issues which would mainly be in Tier 2 subordinated 10 year debt.


UOB chairman, Mr Wee Cho Yaw owns a 15% direct interest in UOB and another 12% of UOB through its 45% cross holdings in Haw Par and UOL. Assuming the above goes through, In an enlarged UOB-OUB entity, this would be diluted to approx 10.2% direct holdings and 8.2% cross holdings of UOB-OUB entity. Wheareas OUB's Dr Lien would have its present 15.7% stake in OUB diluted to 5% of UOB-OUB entity, which is the same if the DBS general offer is accepted. In the absence of other major shareholders, the Wees still controls UOB.

As UOL is also suspended, Mr Wee Cho Yaw might have decided on a plan as to disposing its investment stake in UOL which needs to be divested in accordance with MAS guidelines by 2004.

We believe a counter offer may be offered by DBS while OCBC is still busy with Keppel Capital. But a concrete agreement between UOB and OUB may already be sealed judging from the development of events.

Meanwhile, we maintain "Hold" on UOB.

(Post 1569 of 1951)   06/29/2001.11:42:25
Author :
Keppel Cap can always sit with DBS - under same family anyway.

BG Lee will probably say nothing to them. Remember, it's his dad who has this thing against his fellow old men, while BG Lee & Dhana apparently don't get along very well.

(Post 1570 of 1951)   06/29/2001.12:33:57
Author :
My few earlier posting had suggested the best scenario - OUB+UOB merger would be best option for Singapore consumers, same time keeping this banking operation strictly a private enterprise free from government arm twisting. In the face of the enemy, even past adversaries should unite. Banking mergers are unlike coffeeship mergers, a lot of accounts, consumers will be affected. I've to say the underlying Singaporean sentiment is not in favour of DBS-OUB grouping. Government, MAS may not necessary have the same view as public view. DBS by jumpstarting ads in ST of OUB-DBS growing together is smack of arrogant. My feeling is consumerism right of choice comes first, not at the expense of DBS growing bigger.

(Post 1571 of 1951)   06/29/2001.12:42:51
Author :
If took over, OUB's name is going to disappear in Singapore.

If merger, this two bank can rename as United Overseas Union Bank or UOUB.

(Post 1572 of 1951)   06/29/2001.14:18:49
Author :

Agree with you. Consumer choice is never served by having a monopoly or curtailment in competition, which is what DBS is trying to do. This is simple Economics 101.

(Post 1573 of 1951)   06/29/2001.15:32:59
Author :
HI Yeeming8 and Anderton,

U guys bought any counters today??


(Post 1574 of 1951)   06/29/2001.15:45:55
Author :
To Sell or not to Sell?

That's the question.

Happy trading folks

(Post 1575 of 1951)   06/29/2001.16:12:40
Author :
Research reproduced with permission from DMG.

DBS S$13.20 BUY
UOB S$11.70 BUY

UOB - KCH tie-up on the wing?

·A new twist to the bank merger and acquisition surfaced recently - UOB will make a bid for KCH! OCBC's S$4.8bn all-cash offer of S$3.38 per KCH share and S$1.01 for each KCH warrants (1.7x KCH's book value) is seen attractive. However, the talk is that UOB may counterbid at close to S$4.00 per KCH share 2.0x KCH's book value.

·We see three reasons for UOB to bid for KCH :

1)As much as UOB wants to propel its position ahead of OCBC-KCH after the tie-up, the Wee family may see its major stake in UOB diluted significantly as new share issue is needed to acquire OUB.

2)UOB does not want to tussle with government-linked DBS. There are reports that Senior Minister, Mr Lee Kuan Yew will persuade founder-Lien to sell OUB.

3)Background differences and historical problems between the Wee and Lien may hinder any tie-up between UOB and OUB.

·We believe that OUB may be "shielded" from any counterbid offer. DBS has mentioned that the offer for OUB is attractive and may not revise its offer unnecessarily. We advise investors to be cautious as OUB share price has moved up substantially since the OCBC announcement to acquire KCH on 12 June 2001.

·While the permutation remained unsolved, we maintain our recommendation and advise investors to trade cautiously. We see value emerges at S$12.80 for DBS (BUY on weakness). We maintained BUY on OUB, OCBC and UOB. Hold on KTB.

(Post 1576 of 1951)   06/29/2001.17:09:24
Author :
By Fundollar on Friday, 29 Jun 2001 02:39pm posting #190

Granny wanted to see two big Bashs !

Latest events today :- UOB & OUB both suspended and having news conference later today
seems to imply a mutually consensual wedding is on the cards - United Opposition Banks ...
... ahems! it should be "United Over-see Union Bank" or UOUB

In such a event occuring, DBS could still insist on being the groom-to-be, all it take is for DBS price to rise and rise.

The alternative is for DBS to gracefully withdraw (and the market is saying - Pls be a gentleman ! )
DBS could still outshine another way - by holding yet a Bigger Bash :- marrying two other fair maidens(OC+KC) at one go !!!
===> and a Overseas Chinese Development Bank (OCDB) is also not too bad,
it would still make DBS the undisputed No-1 in Spore, gave it the necessary Malaysian networks to complete its Pan-Asia ambitions
and fullfill Granny's longtime wish to see Two Big Bashs!

I dun think they want to call it a Developed-Bank Oversee Chinese-Bank (DBOCB) !!!

Hint hint...in event of a Overseas Chinese Development Bank formation, the pineapples in the OC plantations will ofcourse, ripen much faster and sooner than the full 3 years timeframe.

On another front - the concerns of KepCapital shareholders...
If there are no
competiting bid for KepCapital, there's a slim chance that OCBC might still enhance it's bid marginally to around $3.60 for share (& $1.23 for wrt), this is given the reality that since their 12-Jun's Take-over Offer, volumns for some 234m KC shares and 151m Wrts(total OS wrts only 50m !!) have been traded ==> and all are traded at well above the 12-Jun Offer price of $3.38 for share and $1.01 for warrants .

But please dun just take my words for it - be very clear that it is your own responsibility, and monies that is at risks here - for any positions that you should decide to take on.

Suddenly so much actions ! and happen within just 3 weeks from the Annual ABS Dinner where new bankings regulations are expected to be announced !!
- was it a case of scripts pre-written elsewhere...
but one thing is clear ! - those "folent tellos" at DBS had underestimated the importance of "facevalue" to a 95 years old Chineseman ??)

Below :- Relative Market Cap(using 28 Jun pricings) and Total Assets Base of a hypothetical OCDB vs UOUB ... !

(Post 1577 of 1951)   06/29/2001.17:15:49
Author :
Reading through all the postings about the UOB-OUB merger is much more welcome by investors than the DBS offered. Not in term of the amount, but the sentiment seems encouraging.

Congrads to the OUB shareholders. This seems to be a better deal. Any more bidders ?

(Post 1578 of 1951)   06/29/2001.17:24:00
Author :
From Bloomberg.com/asia:
UOB offers $4.02 and 0.52 UOB shares for each OUB.

(Post 1579 of 1951)   06/29/2001.17:44:30
Author :
DBS just got slapped by OUB.

Now what is DBS response to all these? They have campaigned and had been on a roadshow to sell the idea of them merging with OUB. Obviously they didnt sell the idea well with Mr Lien.

Now what will the govt say to all these? Turning to a political situation as well. Obviously the govt wouldnt want to lose grip on the banking industry of Singapore. They use to lead very well with POSB, now its eroding. Intriguing situation and expect a nail biting finish.

(Post 1580 of 1951)   06/29/2001.17:45:28
Author :
As an investor as well as customer of OUB I am very happy to see UOB taking over OUB insted of being taken over by DBS. Cheers to Mr. Wee!

(Post 1581 of 1951)   06/29/2001.17:46:36
Author :
Dear all investors,

I am very happy that UOB has taken over instead of OUB. The media has since been flushed with news when DBS broke the news on their hostile takeover. Moreover, I read on BT that SM is going to visit the Lien family to persuade them to sell their stakes to DBS.
So, has the visit taken place already ? HAHAHAHA
How abt JT of DBS going around to elaborate the takeover to all the fund managers ? At the end, I like to say, "What a joke !!!"

Hope that they will have a cheerful dinner tonite at ABS.

(Post 1582 of 1951)   06/29/2001.18:04:32
Author :
As part of the investors, I am happy to see Mr Wee came out to save OUB. Cheers to him too. Then DBS can merge with MAS.

(Post 1583 of 1951)   06/29/2001.18:16:36
Author :

Submitted by TRACEY WOON, DIRECTOR on 29/06/2001

(Post 1584 of 1951)   06/29/2001.20:04:07
Author :
i think OUB's upside is quite limited now...will sell soon...

(Post 1585 of 1951)   06/29/2001.20:06:53
Author :

The Board of Directors of Overseas Union Bank Limited ("OUB" or the "Company") wishes to announce that United Overseas Bank Limited ("UOB") announced today that it intends to make a voluntary conditional take-over offer for all the ordinary shares of S$1.00 each in OUB ("OUB Shares") at a consideration consisting of S$4.02 in cash and 0.52 new UOB shares for each OUB Share (the "Offer"). Based on the last transacted price of each UOB share of S$11.50 on the Singapore Exchange Securities Trading Limited as at 8 June 2001, the Offer values each OUB Share at S$10.00 and all the existing issued OUB Shares at approximately S$9.9 billion.

As a condition to the making of the Offer, UOB required and the Company has agreed to provide UOB an irrevocable undertaking (the "Undertaking") to use its best endeavours, subject to all regulatory approvals and compliance of the conditions thereof, to vote in favour of the agreement by Overseas Union Enterprise Limited ("OUE"), a listed associated company of OUB, to accept the Offer in respect of its OUB Shares, representing approximately 9.4% of the existing issued share capital of OUB, subject to the approval of OUE shareholders.

OUB has also undertaken to use its best efforts to procure, subject to all regulatory approvals and compliance of the conditions thereof, that its associated company, Overseas Union Insurance Limited, furnishes an irrevocable undertaking to accept the Offer in respect of its OUB Shares, representing approximately 1.4% of the existing issued share capital of OUB.

Wah Hin & Company (Pte) Ltd, which owns approximately 15.7% of OUB's issued share capital, has given UOB an irrevocable undertaking to accept the Offer in respect of its OUB Shares.

The Board supports the Offer, noting that the combination of the two banks will provide size and scale for them, together, to compete more effectively in Singapore and in the region, and that the combination will build on the respective strengths of the two banks and their management teams. The Chairman and Vice-Chairman of OUB will be appointed to UOB's management team, and, subject to regulatory approval, all of OUB's directors will be appointed to the board of UOB.

The statements above do not constitute a formal recommendation from the Board of OUB to the shareholders of OUB to accept the Offer. As required by The Singapore Code on Take-overs and Mergers, a formal recommendation to the shareholders of OUB will be given only after the Board of OUB has received the advice of an independent financial adviser with respect to the Offer.

The Board will accordingly be appointing an independent financial advisor to advise the independent directors of the Company in connection with the Offer and the offer announced on behalf of DBS Group Holdings Ltd ("DBS") on 22 June 2001.

Circular(s) containing the recommendation of the independent directors of the Company and the advice of the independent financial advisor in relation to the offers by UOB and DBS will be posted to shareholders of the Company within 14 days from the date of despatch of the relevant offer document.

In the meantime, shareholders of the Company are advised to refrain from taking any action in relation to their shares in the Company which may be prejudicial to their interests.

The Directors of the Company (including those who have delegated detailed supervision of this Announcement) have taken all reasonable care to ensure that the facts stated and the opinions expressed in this Announcement are fair and accurate and that no material facts have been omitted and they jointly and severally accept responsibility accordingly.

Submitted by Mrs Jeannie Tng, Group Corporate Secretary on 29/06/2001

(Post 1586 of 1951)   06/29/2001.20:15:18
Author :
I hope DBS to come out with a better offer.
OUB-DBS is better than a OUB-UOB. What's the point of putting a well run OUB under a UOB who only wants to swim in the small pond in Singapore.

(Post 1587 of 1951)   06/30/2001.05:33:05
Author :
Shareholders to query DBS ads...
Imagine speding a lot of money (very assuming) on ads and the "ang mos" and if finally not willing to counter offer more than UOB, they will then have a lot of expalining to do.

Are they really worth to paid that money, I wonder?

Or are they paid to be scrap goats over the locals...

(Post 1588 of 1951)   06/30/2001.05:53:31
Author :
DABS should have save a lot on ads & provide a better offer !
Rather than printed a "5" on T-shirt,then spent more money to
explain what is it meant.

(Post 1589 of 1951)   06/30/2001.08:23:09
Author :
Repost: By Bluesteel

Situation :

Total Assets (In BIllions):

1 DBS : 111.2

2 UOB : 66.3

3 OCBC: 59.7

4 OUB : 46.6

5 KEPTAT: 26.O 5

a. The prize of being the NO:1 Banks in Singapore.

b. Within their respective financial capabilities(taking divestment of non banking assets into consideration).

c. The successful merging of UOB and OUB

d. Assuming they ( the power that be ) think that 2 big banks is better than 5 (grudgingly might accept up to 3)to fit into the strategic needs of Singapore to be a financial centre and the resultant liberlization of the banking sector.

e. The system is tolerant and shown no preference in the merger of banks and its possible pemutations.

Possible Permutations to be NO:1

Options for DBS:
a.) 1+2 : Just ruled out as 2 will merge with 4 with total assets just pipped DBS by a nose at 112.9 billions against DBS's 111.2 billions.

b.) 1+3 : Unlikely due financial limitation ,in part to DBS commitment in acquiring Dao Heng. Hence DBS went for 1+4 .. now void due a.)

c.) 1+5 : Still possible and within fanancial capabilities ...only course of action open to mantain NO:1( in terms of assets)

(UOB+OUB) options:

Knowing it is beyound the capability of DBS to acquire NO: 3 OCBC and to further pull ahead , to ensure maintaining NO:1 :

a.) To merge with OCBC to be (2+3+4), and become THE BANK , quite unlikely as it must have been thought of ..3 in bed difficult to co-exists!

b.) Only Option to be ahead and checkmate DBS, in terms of assets is just a KepTat away. And well within their combined capabilities too!

OCBC's Option:
First to move in asking for the hands of KepTAT. Now left stranded... in terms of being No:1 .

a.) To leave the offer to kepTat as it is. Unlikely to up offer.

b.) To talk to DBS.... possible but unlikely.

c.) To talk to UOB+OUB.. possible but unlikely

KepTat Options:
Small but beautiful in the merger play. Parents want to married her off ....if the price is right!


a. Do nothing...

b. Do nothing...

c. Do nothing ... in no hurry, Knowing she is the only gal left available in the neighbourhood!


DBS and UOB+OUB chasing only gal left in the neighbourhood.

OCBC .... lost !

KepTat sitting pretty... can Tarik Harga!</I>

Just thinking out loud ! Not an inducement to buy or sell.

(Post 1590 of 1951)   06/30/2001.09:26:48
Author :


ON 29 JUNE 2001, 7:50 PM



Consolidation and Liberalisation:

Building World-Class Banks


Two years ago, MAS embarked on the first phase of a programme to liberalise the banking industry. The aim was to strengthen our local banks through competition, provide Singaporeans with quality banking services, and enhance Singapore's position as an international financial centre. We phased in the liberalisation measures progressively, to give local banks time to upgrade themselves to meet the competition, and maintain the stability of the financial system.
The first package of measures in 1999 comprised a few main elements. MAS permitted 4 Qualifying Full Banks (QFBs) to establish up to 10 locations each, relocate their existing branches and share ATMs among themselves. We granted 8 new Restricted Bank licences to banks that wanted to expand their wholesale S$ business. We also gave Offshore Banks more flexibility to lend in Singapore dollars and engage in S$ swaps, and even wider leeway to 8 Qualifying Offshore Banks.

These measures marked the start of a major and irreversible process of change. We could not foresee exactly how the industry would respond and develop. So MAS committed to reviewing progress at the half-way mark before deciding on further liberalisation measures. We have now completed this review.

Local Banks' Upgrading and Consolidation

Since the first liberalisation package was announced, the local banks have made progress in building up their capabilities. They have generally strengthened their management teams, and invested heavily in infrastructure to provide banking services more efficiently, especially via electronic channels. They have improved their customer relationship management systems, which will allow more effective data mining of their customer databases and cross-selling of multi-sector products.

Local banks have also been seeking opportunities and expanding their presence in the region.

An important and more visible sign that local banks are gearing up for competition is of course the process of consolidation that is underway. The opening gambit was made on 12 June when OCBC announced that it was making a voluntary general offer for Keppel Capital Holdings which owns Keppel TatLee Bank. Ten days later, DBS made an unsolicited bid for OUB. And just three hours ago, UOB made a competing bid after reaching agreement with the controlling shareholders of OUB. All the local banks are now busy reassessing their positions. It is likely that a new configuration will quickly crystallise.

MAS views this as a very positive development for the banking industry, and more importantly for Singapore. If the consolidation is well executed, a stronger group of local banks will emerge, able to hold their own domestically, provide Singaporeans with better services, and compete in the region. Let me elaborate.

The Importance of Consolidation

Economies of scale have become critical in banking today. Banks in the developed countries have been merging and consolidating, globally, in search of greater scale and efficiency. Their customers are demanding faster access to more customised and integrated financial services.

Banks can now deliver one-stop service through faster distribution channels, and develop sophisticated customer relationship systems to customise products. Technology has made this possible. But the cost of investments in technology is high, and can only be justified and recovered if it is spread over millions of customers. Banks like Citicorp have spent tens of billions of dollars, developing IT systems to support their consumer banking services.

Being a big bank is no guarantee of success, as shown by the persistent difficulties of the Japanese banks over the last decade, which in the 1980s were among the biggest banks in the world. But being a small bank is definitely a significant handicap. The logic of Singapore’s position is inescapable: if we want strong banks, then they have to be big banks, and if they are to be big banks, then we must have fewer banks. This is the reality in many small countries. Switzerland, with a GDP and population about twice our size, now has only two big banks – UBS and Credit Suisse – both of which are world-class players.

The Netherlands, four times as big as Singapore, has three – ABN-AMRO, Rabobank and ING, plus Fortis which is partially Belgian. These have become major international players.

Australia, which is slightly bigger than the Netherlands, also has 4 big banks, but they are mainly domestic, smaller than the Dutch although bigger than the Singapore banks. The Australian government maintains a "Four Pillars" policy, under which it will not allow any of the 4 banks to merge or take over any of the others, in order to maintain sufficient competition in the domestic market. But there is debate in Australia over whether this "Four Pillars" policy is sustainable, or whether it will cause Australian banks to lose out in the long run, by preventing them from becoming large enough to be truly viable.

Singapore’s economy is 1/4 the size of Australia’s. Singapore cannot afford a "Four Pillars" policy. If we tried that, our banks would be like bonsai plants, root-bound by the small pots in which they grow. Our biggest bank – DBS, even after the merger with POSBank, is ranked only 115th in the world by asset size. In banking size is not everything, but size is important.

If the local banks fail to achieve enough scale, they will not be able to invest in cutting-edge technology and management systems, or to attract the talent necessary to compete with the best players. Their service standards and product range will not be able to keep up with their foreign competitors. They will find it difficult to diversify their earnings by competing in fee-based businesses, like asset management and cash management. Customers, especially the more sophisticated ones, will take their business to the foreign banks already in Singapore.

The local banks cannot rely on government protection forever. Even if we had not liberalised the banking industry, the foreign banks here would still have been able to use technology and new delivery channels to compete for retail business. In fact, the most innovative foreign banks have been growing their market share despite the restrictions that we have placed on them. Over time, local banks that cannot compete would become marginalised.

This would not be a good outcome. In the event of a crisis, we want to be able to count on strong institutions with a major stake in the country, whose interests will be aligned with those of the long term interests of the Singapore economy. Banks which are tied more closely to Singapore will be more likely to act in support of financial and economic stability. That is why MAS remains committed to building strong local banks with a significant share of the domestic market.

This is the reality that Singaporeans must understand and accept, as we debate the pros and cons of bank mergers. If small banks were economically viable, we would not be meeting tonight with every Singaporean bank either a bidder or a takeover target. The fact that they are bidding and being bid for proves not just that the smaller local banks are vulnerable, but also that the bigger ones themselves feel insecure, and rightly so. If the local banks stay small and weaken over time, we will be worse off for it. In the longer term, stronger and larger local banks offer far better assurance of Singapore’s interests.

MAS’ Approach to Consolidation

While MAS welcomes the process of consolidation, it will remain strictly neutral, and will not seek to influence the outcome. We have made it known to all the participants that we will allow the local banks to bid for one another. The new configuration should be determined by the free play of the market. MAS will leave the banks and their shareholders to decide whom they should merge with or acquire, subject to five conditions being met:

a. First, the banks should have the capability to achieve effective integration following the merger. The management of the acquiring bank must understand the financial, operational, and cultural issues involved in integrating two entities and have a credible plan in place.

b. Second, the merger must not impair the bank's financial soundness. In particular, the bank must meet MAS’ capital adequacy requirements at all times. Consolidation should not compromise the safety and soundness of the bank.

c. Third, we will consider the impact of the merger on competition. Consolidation should not lead to the emergence of one or a small group of overly dominant banks, which are in a position to engage in monopolistic or other anti-competitive behaviour.

d. Fourth, the consolidation should not lead to loss of service for small depositors, for whom affordable banking services are a necessity.

e. Fifth, any cross-border partnerships should not result in the foreign partner taking control of a Singapore bank.

I will elaborate on these five considerations in turn.

Managing the Integration

Consolidation, whilst necessary for the local banks to be competitive, is not in itself sufficient to produce strong banks. Having merged, the banks will have to integrate and rationalise different management teams, information and risk management systems, and internal control procedures. The reality is that some mergers work while others do not. Good execution of a merger will produce a stronger bank, by yielding the expected synergies and cost savings. Poor execution will only lead to a more unwieldy and riskier bank.

A larger scale and wider range of activities will demand stronger and more institutionalised management. Singapore banks have benefited from having their principal shareholders, including family shareholders, play an important role in overseeing the banks, although most no longer run the management. The controlling families have had the entrepreneurship and business acumen to build up the banks, and their long-term interests were substantially aligned with those of the banks. This situation currently serves us well, but is not likely to endure over the longer term. The ongoing consolidation, the lifting of foreign shareholding restrictions, the separation of banking and non-banking activities and the process of generational change will result in a reduction in the relative shareholding of the major shareholders. Succession planning is critical.

The transition from the present framework to the new landscape will need to be carefully managed. The banks have already started taking steps to enhance corporate governance and professional management. MAS has also implemented measures to ensure that the Boards and key committees of the banks have sufficient representation of independent directors, and to encourage the Boards to appoint qualified professionals to run the banks. MAS will continue, by moral suasion and prescription, to encourage the banks to strengthen and institutionalise their managements, especially those merged banks which emerge from the consolidation.

Safety and Soundness

While bigger banks are likely to be stronger and more diversified, they pose a larger risk to systemic stability if they run into difficulties. MAS will intensify its supervision of the merged banks, placing stronger emphasis on evaluating the banks' internal risk management processes and control structures. In the US, the Federal Reserve Board installs examiners almost continuously in the large and complex institutions under their purview, in order to monitor and supervise the banks more closely. MAS does not expect to have to do the same, but more frequent inspections and closer supervision of the banks will be necessary.

While MAS will intensify its supervision, the first responsibility for soundness and prudence lies with the Board and management of the bank itself. Bank management must ensure that they have in place robust, group-wide risk management systems adequate to the new scale and risk profile of the combined entity. This again underlines the importance of top quality institutionalised, professional management for the banks.


We should not allow an enlarged bank, or a few banks in a consolidated banking industry, to use their market power to engage in monopolistic or other anti-competitive practices that raise prices, diminish consumer choice, or erect barriers to entry by other players. MAS does not think this will happen. It is unlikely that the largest bank in the system will have an over-dominant share. For example, if OUB merges with one of the larger banks, their combined market share of non-bank deposits will be at most about 30%. This will still be significantly less than the share of the largest banks in other small countries, like the Netherlands and Hong Kong.

Secondly, the competition will not just be among the remaining local players. The banking liberalisation programme will continue to introduce greater competition from foreign banks, in the range and pricing of products they offer and quality of service.
Thirdly, the Government will be vigilant against any abuse of market power. The Competition Act that MTI is now considering will help us to do that.

Small Depositors

Given the prospect of mergers and rationalisations, it is natural that many bank customers are apprehensive and worried about how they will be affected. A merger will result in rationalisation of branch and ATM networks, which will inconvenience some customers. But overall, customers should have access to more branches and ATMs after the merger, even though not every existing branch and ATM can necessarily be retained. And because a larger merged bank can operate more efficiently and realise revenue synergies, it should be able to provide better service and greater choice to customers. Of course the bank will have to handle the implementation carefully and sensitively, giving customers adequate notice of changes and helping them to adjust.

It is in the bank’s own interest to do this, and I am sure they will make every effort to do it well.

Unfortunately this does not mean that as a result of a merger, every bank service will become cheaper or free. This is not possible, not because of mergers, but because of competition. Competition will force banks to watch their bottom lines more closely, and to make each service and product break even. It will become harder for banks to continue cross-subsidising services that they used to provide for free or below cost. That was a luxury that they could only afford in a protected and languid market where profits came easily, a state of affairs which was unsustainable in the long run. DBS is already facing this pressure – the public is upset that some branches have been closed, but analysts and investors are criticising DBS for not rationalising the branch network and extracting cost synergies fast enough.

Furthermore, as banks focus more on returns, they will tend to concentrate on the middle and upper segments of the market, where they can sell a wider range of services and earn better margins. However, if all banks neglect small depositors, this would cause a problem to lower income Singaporeans, in a society that is increasingly cashless.

Other jurisdictions like the US and Australia also face the same problem, and either have implemented or are studying requirements for basic banking accounts. In the State of New York, banks are required by legislation to provide such accounts, while in some other US states the banks have voluntarily offered such services so as to avoid the heavy hand of legislation.

Banks have to be allowed to recover their costs, just like utilities and public transport companies. But they should not simply opt out of the responsibility to service the mass market. The Government will therefore ensure that in this competitive environment, low-income Singaporeans continue to have access to basic banking services at affordable prices.

This is not an immediate problem, even after consolidation among the local banks. DBS already has an obligation to play a social role, and service the mass market, because that was a condition of the sale of POSBank to DBS. Most of the local banks also service small depositors. This will continue. However, over the longer term, the conflicting pressures on banks on the one hand to provide a public service, and on the other to earn competitive returns for shareholders, will persist and intensify.

ABS has encouraged banks that engage in consume banking to provide affordable basic banking services to lower income Singaporeans. MAS welcomes this, and hopes that these banks will find ways to meet this need. MAS will monitor the situation closely, together with ABS and the banks. When it becomes necessary, MAS will require all banks with significant retail operations in Singapore to provide basic banking accounts with defined minimum features to low income Singaporeans.

Cross-border Partnerships

As the financial industry continues to change rapidly and the global banks grow even larger, consolidation among the local banks alone may not be sufficient. Apart from seeking growth and acquisitions abroad, the local banks may also seek out foreign partners. Strategic partners can bring expertise and market discipline to Singapore banks. MAS has encouraged the local banks to explore such strategic alliances and is prepared to approve significant stakes by foreign banks, provided three conditions are met:

a. One, the foreign player must be more than a financial investor. It must become a strategic partner bringing specialised skills, new technologies, or business strategies to the bank. The outcome must be in the long term interests of the bank;

b. Two, the strategic partner must be a sound and well-managed entity. The alliance should not result in a higher risk profile for the Singapore bank through, for example, increased contagion and reputation risks; and

c. Three, the Singapore character of the bank must be retained. Foreign parties cannot become controlling shareholders, even if the controlling stake is less than 50%. To allow this would circumvent a key objective of our liberalisation programme, that is to build strong local banks which can underpin the stability of the banking system.

Some of the local banks have already had initial discussions with prospective foreign partners, although so far nothing has materialised. These proposals have not failed because of regulatory objections. MAS' stand is clear: as long as the foreign partner is not seeking to take control of the local bank, we are open to discuss all possibilities.

Banking Liberalisation - The Second Phase

The consolidation being played out among the local banks is a clear indication that they understand the urgency of strengthening their competitiveness. Overall, the local banks have responded well to the liberalisation programme, upgraded their capabilities and maintained their market shares. This has given us confidence to proceed now with the second phase of liberalisation. The second package of measures has three main components: freeing up entry to domestic wholesale banking, enhancing competition in retail banking, and instituting prudential safeguards necessary for a more liberal banking environment.

Freeing Up Entry to Wholesale Banking

First, we will significantly broaden participation by foreign banks in the domestic wholesale market. We have to do more to encourage quality international banks to use Singapore as their Asian base. Granting them more access to corporations and high net worth individuals will strengthen their business case to develop their operations in Singapore.

Opening up the wholesale market to international banks will also benefit industries in Singapore. It will give our industries better access to world-class financial products and services that will help them develop their businesses.

MAS will make a fundamental shift, towards a licensing regime that distinguishes between retail and wholesale banks, away from the 3-tier licensing regime of Full, Restricted and Offshore Banks. We will rename the existing Restricted Bank licence as the "Wholesale Banking" licence to better reflect the wide range of activities that can be already conducted under the licence. We will phase out the Qualifying Offshore Bank and Offshore Bank licence, and upgrade all existing QOBs and OBs to Wholesale Bank status over time. The upgrading will allow these banks to accept S$ fixed deposits above $250,000 and operate S$ current accounts. It will also remove limits on the amount of S$ lending that they otherwise face as offshore banks.

We plan to grant some 20 Wholesale Banking licences over the next two years. Banks will be admitted to Wholesale Banking status in priority of their financial strength and ability to contribute to Singapore's financial industry. The 8 Qualifying Offshore Banks will be given priority in the upgrading. Existing Offshore Banks as well as banks that do not yet hold a banking licence in Singapore are encouraged to apply. After these 20 licences are granted, we will review the pace of upgrading the remaining Offshore Banks.

Enhancing Competition in Retail Banking

In retail banking, we will maintain the momentum of liberalisation by improving on the first package of measures. We will take applications for the two outstanding QFB licenses. We will also expand what a QFB is allowed to do:

a. With immediate effect, they will be permitted to establish up to 15 locations (previously 10), of which up to 10 (previously 5) can be branches, and the rest off-site ATMs.

b. From 1 July 2002 QFBs will be allowed to provide debit services on an EFTPOS network. QFBs can negotiate with an existing EFTPOS network such as NETS, Visa or Mastercard, for access on fair commercial terms. QFBs will then be able to provide debit services such as debit cards, and cashback at retail outlets. Using the Visa network alone to provide debit services will open up more than 23,000 terminals to the QFBs. With cashback services, each EFTPOS terminal, whether run by NETS or a credit card company, becomes a potential cash withdrawal point.

c. Also from 1 July 2002, QFBs may offer Supplementary Retirement Scheme accounts, accept CPF fixed deposits, and offer agent bank accounts under the CPF Investment and Minimum Sum Schemes. Liberalising the CPF Investment Scheme alone will open up a large pool of funds that could be placed with the QFBs. About $62 bn of funds in CPF Ordinary and Special Accounts are still available for investment under the CPF Investment Scheme.

These measures will significantly enhance competition in retail banking in Singapore. With 6 QFBs permitted to share ATMs among themselves, the increase in locations could result in a QFB ATM network of 90 or more locations across Singapore. Together with access to a nationwide EFTPOS network, this provides QFBs with significant scope for expanding their presence in the domestic market. For consumers, these changes will mean more choice and greater accessibility.

The only part of the retail payments system not yet liberalised will be access by the foreign banks to the local banks' ATM networks. Foreign banks have not been allowed to provide their customers with ATM services on the local banks' networks. We will maintain this restriction for now.


These changes to the wholesale and retail banking markets represent a substantial opening up of the industry. We expect foreign participation in Singapore's banking industry to increase as we liberalise. More people will invest and deposit their money with foreign banks. MAS is therefore looking into two measures to safeguard depositor interests – subsidiarisation of systematically-important foreign banks and deposit insurance.

Subsidiarisation of Systemically-Important Foreign Banks

Local banks are required to maintain a minimum of $1.5b in paid-up capital and meet MAS' capital adequacy ratio requirements to ensure that they have adequate resources to support and expand their operations. MAS’ requirement of a minimum of 8 percent Tier I capital and 12 percent Tier I plus Tier II capital exceeds the international standards set by the Basel Capital Accord. However, QFBs and foreign banks can operate as branches, and accept retail deposits without any paid-up capital in Singapore. This has led local banks to complain that the playing field was tilted against them. It was tenable in the past when individual foreign banks had a small share of the domestic market and we placed greater reliance on the home supervisor. But as we open up further, we need to make sure that the prudential safeguards that apply to foreign banks are commensurate with their increased role in the retail deposit market.

MAS is considering requiring systemically-important foreign banks with a large retail presence to subsidiarise their operations in Singapore. This means that the foreign bank will have to incorporate in Singapore and meet MAS' minimum paid-up capital of $1.5b, as well as MAS’ CAR requirements. Subsidiarisation will provide greater clarity and certainty in supervision. A subsidiary is a separate legal entity from the parent. It will have its own assets and will have to maintain its own capital. This will allow us greater flexibility to ringfence the subsidiary, and minimise contagion arising from problems that may emanate from the bank's home market or global operations, especially where the home jurisdictions have laws which favour depositors in the parent bank over depositors in overseas branches.

Subsidiarisation will not turn the subsidiary into a local bank. The foreign parent bank will in most cases own 100% of the subsidiary and want full control over its activities. MAS will continue to treat the subsidiary as a foreign bank, and will exempt it from a requirement placed on local banks to maintain a majority of Singapore citizens or permanent residents on their board of directors.

MAS is studying this issue and will make a decision later this year. We would not be the only jurisdiction with a subsidiarisation requirement. Several reputable jurisdictions, such as Australia, the US, and Canada, go even further and require that in order to accept any retail deposits at all, foreign banks must incorporate locally and meet the minimum capital requirements imposed on locally incorporated banks.

Deposit Insurance

We will study the need for a deposit insurance scheme in Singapore. Unlike most countries, Singapore does not have a deposit insurance scheme. In the past, sound management and conservative practice by the local banks, coupled with strict regulation and supervision by MAS, helped to avoid problems in our banking system. On the few occasions when a foreign bank has run into difficulties, MAS has managed to ring-fence the banks' Singapore operations in time – as we did during the Asian crisis – so that Singapore depositors did not suffer losses. However, as we liberalise, foreign banks will gain market share. Local banks will also venture abroad. The safety and soundness of both local and foreign banks will increasingly be affected by factors beyond our control. We have seen how in other countries even well-run international banks supervised by highly-regarded authorities can nevertheless run into financial trouble.

Even as we strengthen MAS supervision, we cannot expect our supervisors to always be in time to pre-empt any difficulties that the bank has not prepared itself for.

No government can promise to bail out depositors whenever a bank runs into trouble. If a government did so, depositors would lose the incentive to seek out sound banks, and banks would lose the incentive to lend prudently, knowing that even if they run into trouble their downside risks will be absorbed by the government. This is what bankers call moral hazard. However, in the absence of a deposit insurance scheme, there will be an implicit expectation, both by depositors and banks, that if something goes wrong, particularly with a large bank, the government will be there to pick up the pieces. And should a mishap happen, the government may come under strong political pressure to do so. This can be destabilising.

Deposit insurance makes clear where depositors stand: depositors know exactly how much of their money will be protected if a bank fails. Government statements that it will not bail out depositors beyond the insured amounts become more credible. However, deposit insurance is not without its downside. If its coverage is too broad, or it insures too large a proportion of deposits, it can cause the same problems as a government guarantee. A poorly designed deposit insurance scheme may make the banking system less rather than more stable. These problems can be mitigated if the deposit insurance scheme only insures small deposits, or sets premiums in line with the relative riskiness of banks, or discriminates between banks and subsidiaries that are incorporated here from those that are not. These are complex issues that need careful study, which MAS has begun.


This liberalisation package will provide further impetus for upgrading and progress in the local banks and Singapore's financial sector development. We will review the progress made in another 2-3 years, before deciding on further moves.

Consolidation and continued liberalisation are important in building strong banks. But they are not in themselves sufficient. Banks must press on to upgrade their capabilities. They must keep abreast of international best practices, new products, technological developments and new ways of doing things, while retaining the support and confidence of consumers. ABS can play a part to help the banks do this. The government will do its best to maintain a sound regulatory framework, conducive to competition and innovation. But finally, success will depend on the quality and passion of the people in the financial industry. Together we have to build the skills, develop the businesses, and enhance the regulatory framework to make Singapore the premier financial centre in Asia.

(Post 1591 of 1951)   06/30/2001.09:36:44
Author :
UOB+OUB - will see after the honeymoon. The board looks funny to me.

(Post 1592 of 1951)   06/30/2001.13:16:22
Author :
Irrevocable letter of undertaking by OUE and some substantial shareholders to sell their stake to UOB . . . . .

Question : why not wait for a better offer ? what's the hurry to accept UOB's offer . . .rest of shareholders may get a better price (higher than $10.00) if there's a bidding war . . . .

(Post 1593 of 1951)   06/30/2001.14:27:35
Author :
Lor Lien called Lor Wee last week.

Lor Lien said: "Ah Wee, one ang mo ga lang gu ni knocked on my door. Ang mo told me he wanted to buy all my old newspaper in my house."

Lor Wee said: "How much per kilo?"

Lor Lien said: "Not all cash, funny la. Ang mo want to exchange his ang mo newspaper with some cash for mine. It work out to be 0.61 kilo of ang mo newspaper and $1.14 for every kilo of my old newspaper"

Lor Wee said: "You cannot sell to the ang mo. All your old newspaper has your family history. You also cannot read ang mo's newspaper."

Lor Lien said: "Ya loh".

Lor Wee said: "Let me help you. Bring all your old newspaper to my home. I will pay 0.51 per kilo with $4.12 for every kilo of your old newspaper."

Lor Lien said: "Ho Ho, thanks for your help. Our old newspaper cannot go to ang mo's house."

(Post 1594 of 1951)   06/30/2001.18:42:04
Author :
Merge is for higher efficiency, higher productivity, removal
of duplication, to be more competitive, more aggressive.
It should not be done for the sake of keeping the chinese bankers spirit.
Are they going to add the two banks' employees regardless of duplication, keep the number of ATMs unchanged, maintain the branches
and keep two computer systems, etc. to please everybody?
I hope this UOB-OUB merge is not an emotional exercise.

I will feel more comfortable if OUB CEO runs the new UOB-OUB organization. It is a pity that OUB goes to UOB. The right marriage
couple is DBS-OUB.

(Post 1595 of 1951)   06/30/2001.18:52:22
Author :
Operation Face Saving.

(Post 1596 of 1951)   06/30/2001.19:00:52
Author :
According to BT report today, WCY have given assurance to OUB chairman & CEO (LHS & Peter Seah) that cost-savings measures will be based on the merits and capabilities of each individual and not on the basis of which bank he/she has worked for. If he keep his words, there is better chance of achieving the revenue and cost measures arising from the merger.

It would be interesting that who would be picked as the next successor of the merged entity from the 2 deputy chairman/presidents (ie. Peter Seah or his son Wee Ee Cheong).
If Peter Seah is picked as the eventual CEO of the merged entity, it wld be seen as separation of ownership and management of the family-owned bank, which wld be good for shareholders and investors.

However, if DBS were to takeover OUB, there is high chance that most of the OUB top mgmt be sidelined as in POSB acquisition and replaced by foreign talent (or fallen talent ???). I believe this is the fear of OUB founder, Lien Ying Chow.

(Post 1597 of 1951)   06/30/2001.19:08:07
Author :
Blood is thicker than water.
Sorry, this is family business, you will not put your son under an outsider.

(Post 1598 of 1951)   06/30/2001.22:24:43
Author :

Unfortunately, even a doting father can tell that his son not very up to the mark compared to P.S.

(Post 1599 of 1951)   06/30/2001.23:17:03
Author :
Hi Adamsmith

Unfortunately, PS is going into another arena. So WCY must still hold fort.



(Post 1600 of 1951)   06/30/2001.23:30:36
Author :
or go & hire foreign talent?

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