SINGAPORE-BASED banking groups, long thought to be conservative compared with their multinational counterparts Citigroup, HSBC and Standard Chartered Bank, are beginning to strengthen their foothold in Malaysia and in the region.
Apart from growing organically through the subsidiaries in the countries they operate in, the groups are also now looking for opportunities to acquire and merge with local banks and other financial services companies in the region.
United Overseas Bank (M) Bhd (UOB Malaysia) chief executive officer Chan Kok Seong said the vision of its parent, the UOB Group, was to be a premier bank in the Asia-Pacific region committed to providing quality products and services.
“In line with this vision, we have several strategies in place to ensure that we achieve that goal and acquisition is one of them. To this end, the group had in July this year acquired 80.77% interest in Bank of Asia in Thailand and in June, a 23% stake in PT Bank Buana in Indonesia.
“However, this strategy has put UOB on the fast track in reinforcing its position as the region's premier bank. The recent acquisitions have opened an avenue for UOB Malaysia to seek cross-border opportunities in offering and tapping the products and services of other banks in UOB's network in the region,'' he said in an interview with StarBiz.
The group has been operating in Malaysia since 1951 via wholly-owned UOB Malaysia. It has 37 branches nationwide, making it the foreign bank with the largest network of branches in the country. Last year the group's total assets stood at S$113.4bil, an increase of 5.6% over the S$107.4bil recorded in 2002.
OCBC Bank (M) Bhd director and CEO Datuk Albert Yeoh Beow Tit said: “To help grow our business and presence, the OCBC group is interested to acquire local banks in Malaysia if it is permitted to do so when the liberalisation of financial institutions under the Financial Sector Master Plan kicks in by 2007. In the meantime, we will focus on building our business organically by investing in people and technology.”
In July this year, the OCBC group raised its stake in Great Eastern Holdings Ltd, the parent company of Great Eastern Life Assurance Malaysia, to 81% from 49% previously, demonstrating its commitment to capture a larger slice of the Malaysian financial services market.
The move was good for OCBC Bank, Yeoh said, as it would be able to tap the wealth management market by leveraging on Great Eastern's 17,000 agents as well as its own sales force to cross sell the bank's suite of products, including credit cards, and home loans etc.
OCBC Bank, which currently commands 5.1% of the total loans market in the country, aims to grow its share in the small and medium business segment, in which it is traditionally strong. One of the ways, he said, was through tailored credit programmes and via its Internet cash management capabilities.
On regional expansion, Yeoh said under OCBC group's “New Horizons” strategy, it aims to establish a presence in a third country, one that is outside the group's core Singapore and Malaysian markets. This third country, he added, was Indonesia.
The OCBC group, he noted, had made headway there by strengthening its alliance with Indonesian Bank NISP via the acquisition of a 22.5% stake in April this year.
Yeoh said this alliance would enable the group to tap Bank NISP's strong local knowledge of the market, its 145 branches and 5,000 shared ATMs.
With Temasek Holdings currently awaiting the Finance Ministry's approval of its purchase of a 15.4% stake in Malaysian Plantations Bhd (MPlant), things look bright for Singapore's DBS Bank to get a slice of the Malaysian banking industry.
MPlant is the holding company of Alliance Bank Malaysia. Its acquisition would potentially make Temasek the single largest shareholder of MPlant. Temasek owns 28% of DBS Group Holdings, the parent of DBS Bank. The bank currently has a branch in Labuan and a representative office in Kuala Lumpur.
DBS Group is the largest banking group in Singapore with total assets amounting to S$160bil in 2003 and the fifth largest banking group in Hong Kong in terms of assets. As at June 30, its total assets stood at S$168.2bil.
UOB's Chan said besides looking for acquisition opportunities, the group would also concentrate on strengthening and growing its personal financial services and small and medium-sized enterprise businesses, fee-based activities and also leverage on leading edge-technology in the country and in the region.
Being a Singaporean bank, he added, UOB was very much attuned to Malaysian grassroots as both Malaysia and Singapore shared a common cultural heritage.
He said as part of the UOB group, the bank was backed by the vast financial resources of its parent bank and its international network of 380 offices in 18 countries and territories, including Thailand, Indonesia, Australia, Brunei, Canada, Britain and the United States.
Asked whether DBS Bank has plans to expand its operation in Malaysia and the region, managing director and head of group communications, Catherine Ong, said: “Our licences currently restrict us from carrying out domestic banking businesses. We are always exploring strategic and business initiatives in the region as we desire to grow our pan-Asian footprint. Malaysia is a large market, a hinterland for Singapore.
“We believe that with the proximity of location and the close, historical ties between the business communities in the two countries, DBS is well positioned to tap the business flows across both sides of the Johor Straits.''
Ong said since the group set up its Labuan branch, it had been active in the Malaysian corporate scene and had helped Malaysian corporates raise offshore capital for their businesses as well as provide financial support for foreign companies which had businesses in Malaysia.
DBS Bank, she added, was today recognised as a leading offshore bank in Malaysia through its role as a leading arranger of syndicated offshore loans.
Since 2002, DBS Bank has arranged and co-arranged more than 13 offshore syndicated transactions worth more than US$2.3bil in Malaysia.
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