Singapore banks face difficult year: ING Barings<\/p>\n
SINGAPORE (AFP): Singapore banks face a brutal environment
\nover the next 12 months as the impact of consolidation and an
\nonslaught of foreign competition erodes earnings, Dutch banking
\ngroup ING Barings said Wednesday.<\/p>\n
Of the city-state's five banks, only three will survive the
\nwave of mergers now taking place, the group said in a report.<\/p>\n
It predicted United Overseas Bank (UOB) will win the battle
\nfor Overseas Union Bank (OUB), putting it alongside DBS Group and
\nthe merged Overseas-Chinese Banking Corp. (OCBC) and Keppel
\nCapital Holdings to compete against foreign banks.<\/p>\n
ING Barings banking analyst Tay Chin Seng downgraded
\nSingapore's banking sector to underweight from neutral as the
\nbanks \"are likely to face difficult operating conditions in the
\nnext 6-12 months, with low asset growth coupled with the erosion
\nof net interest margins.\"<\/p>\n
With an \"underweight\" rating, shares of the banks are expected
\nto lag the stock market.<\/p>\n
The competition was set to intensify as foreign banks issued
\nwith full banking licenses began participating in the local debit
\ncard payments network.<\/p>\n
\"This marks the first step in leveling the playing field for
\nforeign banks and may not necessarily be the last,\" said Tay.<\/p>\n
\"This development is expected to lead to fiercer competition
\n-- ultimately liberalization of the domestic banking sector will
\nmean that organic asset growth will become difficult and the only
\nmeans to change this is through regional acquisitions which is an
\navenue fraught with difficulties.\"<\/p>\n
Tay put a \"sell\" recommendation on OCBC and UOB as \"they are
\nexpected to be hampered with domestic integration risks.\" and a
\n\"buy\" recommendation on the city-state's biggest bank DBS.<\/p>\n
DBS and UOB were locked in a tussle to acquire OUB, although
\nUOB appeared to have the upper hand with its S$10 billion (US$5.5
\nbillion) bid winning the backing of OUB founder and 26.5 percent
\nshareholder Lien Ying Chow.<\/p>\n
DBS has said it would not revise its $9.4 billion bid.<\/p>\n
Meanwhile, OCBC's planned $5.21 billion takeover of Keppel
\nCapital took a step closer to being sealed after it announced
\nWednesday it had secured 70 percent of Keppel's issued and paid-
\nup share capital, well above the 50 percent needed for the deal
\nto go through.<\/p>\n
It had also received acceptances totaling 74 percent of all
\nlisted warrants.<\/p>\n
OCBC had earlier said its offer was conditional on acceptance
\nby 50 percent of all shareholders. Two other conditions relating
\nto regulatory approval by the Monetary Authority of Singapore and
\nthe Singapore Exchange have been met.<\/p>\n
Keppel TatLee Bank is the smallest of five Singapore
\nbanks.<\/p>\n
Keppel Capital major shareholders have already given their
\n\"irrevocable\" support for OCBC's bid. The rest of the
\nshareholders have until August 17 to accept the offer.<\/p>\n
OCBC chief executive Alex Au said he was \"delighted\" by the
\nhigh level of acceptances.<\/p>\n
\"We ... are confident that the remaining (Keppel Capital)
\nshareholders and warrantholders will recognize the benefits and
\naccept the offers by the closing date,\" he said in a statement.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/singapore-banks-face-difficult-year-ing-barings-1447893297",
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