A recent Singapore government directive says banks must get out of all non-banking businesses in three years. All this activity earned those banks several hundred million dollars. Full divestment will reap billions. They can lend more, but loan growth in Singapore is slow.
Bigger institutions can use the money to buy distressed banks in the region.
They've already started, but many of those forays haven't been very successful. Buying weak banks in Indonesia or India for the sake of regional expansion won't do anyone much good. Another concern is how the sell-down of all those assets will affect Singapore's already lackluster property and stock markets. But to simply leave the money to the managers of the banks and hope they will invest wisely in the region is probably not a good idea. All Rights Reserved.