Singapore may open banking sector

Singapore may open banking sector

SINGAPORE (AFP): The Monetary Authority of Singapore (MAS) was reported Saturday as saying it will "consider seriously" opening up the island state's banking sector to full foreign participation earlier than the existing five-year time frame.

The move to shorten the time frame followed suggestions from a panel of world finance experts that Singapore should swiftly liberalize the banking sector if it wanted to enhance the island's financial hub status.

The International Advisory Panel, comprising some of the top names in world finance, was set up by the Singapore government last year to get private-sector advice on the banking industry.

The MAS, the de facto central bank in Singapore, said in a statement to local newspapers that the influential panel members had felt that the five-year period might be too long.

"This is because the best opportunity for Singapore banks to build up a presence in the region will be when countries begin to recover over the next two to three years.

"MAS will consider seriously this view of the (panel) in working out the timetable for liberalization," the Business Times daily quoted the statement as saying Saturday.

Among members of the International Advisory Panel were Alfred Berkeley, president of the Nasdaq counter in the US stock market, Jan Kalff, chairman of Dutch bank ABN AMRO Bank NV, Michel Pbereau, chairman of Banque Nationale de Paris, and Yoh Kurosawa, chairman of Industrial Bank of Japan.

Among the panel's key suggestions after a meeting here earlier this week was that Singapore's banking sector should be open to full foreign participation, but in a "properly paced and sequenced manner."

In the statement, MAS said it had been encouraging the consolidation of local banks but it "cannot dictate actual mergers."

"These are decisions for their boards and their shareholders to make," it said, adding that the banks "will have to weigh the competitive implications and opportunities and decide for themselves the strategies to pursue."

The panel thought that Singapore should allow foreign banks greater scope in providing retail banking services, while encouraging local banks to consolidate among themselves and explore strategic alliances with foreign institutions.

Some 200 foreign financial institutions operate in Singapore with restrictions largely on retail banking.