Asia sees more financial mergers

Asia sees more financial mergers

SINGAPORE (DPA): Asia's financial sectors will see more
mergers and acquisitions as cash-rich Singapore institutions seek
to expand and Hong Kong banks are forced to consolidate, a
leading U.S. investment firm said on Thursday.

"Changing profit dynamics and market liberalization should
heighten merger and acquisition activity," said a report from
Salomon Smith Barney (SSB).

The report noted domestic consolidation is imminent in Hong
Kong, but the well-capitalized banks in the city-state "are
aggressively seeking cross-border expansion ... in the current
climate of increasing globalization."

"No Asian franchise, however large, is immune from being an
acquisition target," SSB said.

With some 265 authorized institutions, Hong Kong is "over-
banked" and fragmented, the report said, while reasons for
mergers in Singapore are different.

"Changes in the profit equation and a mature market are
forcing change nonetheless" in the city-state, said SSB.

The report said change had resulted from liberalization of the
banking sector, a mature loans market estimated to grow at an
annual pace of 6 to 7 percent, lower interest margins and rising
costs as banks are forced to make more technology investments to
enhance fee- based income.

The country's five local banking groups, DBS Group Holdings,
OCBC Bank, United Overseas Bank, Overseas Union Bank and Keppel
TatLee Bank, have so far chosen the regional expansion route.