MM Lee says S'pore banks may need to consolidate to expand overseas

DBS merges with OCBC? Since UOB is a family controlled bank so it is harder to eat up.

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By Imelda Saad

Posted: 25 June 2010 2256 hrs

SINGAPORE : Minister Mentor Lee Kuan Yew said Singapore's local banks may need to consolidate if they want to effectively expand overseas.

He said the three local lenders did not have the size to engage foreign markets in the same way that global leaders do.

Speaking at an event organised by the Association of Banks in Singapore on Friday, Mr Lee suggested that it might be better for the banks to consolidate to two, or even one entity to generate the mass required to break into foreign markets.

With opportunities in China and India opening up, and limited penetration in Southeast Asian markets, Mr Lee said local lenders needed scale.

He said: "We're in Indonesia in a small way, Malaysia in a small way, Thailand almost nothing. But the big future is in China and in India. And I don't see three banks as capable of making that foray as two banks… Just look at the capitalisation of the big banks in the US and in the UK."