OUB writes off RI from its investment map

OUB writes off RI from its investment map

SINGAPORE (Dow Jones): Singapore's Overseas Union Bank (OUB) is looking to acquire stockbroking outfits in Malaysia and the Philippines, but has written troubled Indonesia off its investment map for now, President and Chief Executive Officer Peter Seah said in an interview with the Straits Times.

While denying widespread rumors of a takeover by Overseas- Chinese Banking Corp. Ltd., Seah said, "Insofar as our future is concerned, we definitely do not discount the possibility of OUB wanting to enter into some partnership or some strategic alignment."

Both banks rank among Singapore's four leading banks.

"But this formula may not necessarily be a domestic formula of OUB entering into another local operation," he added.

Seah said OUB was keeping its options open in terms of foreign partnerships.

"There are a lot of institutions that have invested in us and we think we are an attractive institution for instant access into the region," he said.

In terms of acquisitions, Seah said regional assets have fallen to bargain levels in the wake of the financial tornado that has ripped through Asia over the last year.

"I think within the next 24 months, there will be a lot of serious hunting for acquisitions, not just by us, but by all sorts of institutions," he said.

But he said that while asset prices continue to tumble towards a bottom, there was danger of acquiring a loss-making entity.

We think that we should rather take our time, evaluate carefully because a wrong move, even if for strategic reasons, can have a very serious impact on our bottomline and balance sheet," he said.

He said asset values in Thailand and Indonesia will reach "more realistic levels" when insolvency laws are put in place.

"So there is no need to rush in to acquire things unless there are really clear-cut quality assets or trouble-free licenses to be acquired," Seah said.

While the economic turmoil deepens, Seah said banks will have to contend with soaring non-performing loans and hefty provisions.

He said non-performing loan levels will rise in the second half of the year, adding, however, that additional provisions were difficult to assess.