HSBC, Maybank win Singapore licenses


Singapore's banks face increased foreign competition

By Jane Searle and reports

SINGAPORE (CNN) -- Singapore is granting licenses to Malaysia's Maybank and Hong Kong-based HSBC as it continues to reform its banking sector and broaden competition.

The Monetary Authority of Singapore announced Tuesday that it would issue "Qualifying Full Bank" licenses to the two banks as part of its ongoing deregulation of the banking sector.

These are the final two of six licenses the MAS has issued. The first four went in October 1999 to ABN Amro, BNP, Citibank and Standard Chartered.

The MAS said it may consider issuing more such licenses in the future.

Sixteen foreign banks, including the National Bank of Australia and the Industrial Bank of Japan, have also been granted "Wholesale Bank" status - just one step from being QFBs.

The QFBs will take effect from January 1. They enable foreign banks more flexibility to open branches and automatic teller machines, plus offer a wider range of products.

"In a nutshell, with QFB status, we are in a better position to grow what is already a strong franchise network for HSBC in Singapore", Eric Gill, CEO and managing director for HSBC Singapore, said in a statement.

Immediate expansion

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HSBC is one of the world's biggest banking groups, with over 6500 offices in 78 countries. It has operated in Singapore for nearly 125 years

The Maybank Group is Malaysia's largest banking organization, with over 400 branches.

"Our immediate priority will be to maximize our footprint and penetration to deliver our products and services in Singapore," a Maybank spokesperson told the Business Times.

HSBC says its first priority will be to offer easier account access by increasing ATM sites.

Maybank will also explore possibilities for a shared ATM network with other foreign banks in Singapore.

No threat to locals

A shared network would enable both banks to establish ATMs in 90 locations, but still leave them well behind local banks' network of over 1300 ATMs, according to the Business Times.

Foreign banks would also target different customers, and therefore not pose a serious threat to local banks, say analysts.

The granting of QFBs aims to promote competition and quality in the financial sector, the MAS said in a statement.

MAS began opening up commercial banking in Singapore two years ago.

Singaporean local banks DBS, OUB, UOB and OCBC were involved in a series of mergers earlier this year to boost their competitive position.

DBS successfully acquired Hong Kong's Dao Heng Bank in May, and then in August attempted to take over Singapore's fourth-largest bank, OUB. But it was beaten by second-ranked UOB, which struck a friendly merger with OUB.

Earlier, OCBC took over fifth-ranked Keppel TatLee Bank.