the entirety of their operations by january 2016. • banks which are designated as domestic systemically important banks ( d - sibs ) in singapore will be subject to additional supervisory measures over both their domestic and offshore businesses. 1 • in addition, where a foreign bank branch has significant retail presence in singapore, it will also be required to locally incorporate its retail operations. the subsidiary will be subject to the same suite of regulation as the local banks, and the same supervisory regime aimed at minimising risks to local depositors. 23. together, the enhanced global and domestic regulatory standards mean that the dbuacu divide is no longer useful. if we continue with the divide, it would merely impose undue administrative burden on banks, without materially enhancing prudential soundness or systemic stability. 24. hence, mas will be removing the dbu - acu divide in its banking regulations. the details will be released in an mas consultation paper by august. there is no rush. we will implement the changes in close consultation with the banking community, and phase them in over time. 25. this is a significant rationalisation in our banking regulation landscape. but i have to emphasise that one thing remains unchanged, and that is singapore ’ s commitment to promoting the growth of the asian dollar market, and the international business of banks based in singapore. establishment of financial centre advisory panel ( fcap ) 26. indeed, a strong partnership between the mas and industry leaders and practitioners has been key to the development of singapore ’ s financial sector, and how we got to where we are today. it will be even more important in the coming years, with changes accelerating in the financial world. 27. mas will therefore strengthen its dialogue with the financial industry. we will set up a financial centre advisory panel ( fcap ) comprising senior leaders from the banking, for example, as a d - sib, the foreign bank will be required to conduct recovery and resolution planning to reduce the potential for failure and promote their resolvability for an orderly winding - down. bis central bankers ’ speeches insurance and asset management industries. the panel will provide guidance in two broad areas : • first, overall financial sector developmental strategies. industry leaders and experts will provide advice on opportunities across the various financial activities, and propose initiatives to ensure continued vibrance in singapore ’ s financial centre. this includes building synergies across different activities – for example, spurring the development of the capital markets by building on the asset management sector

shopping ". increased size and market share may give a bank more credibility in the eyes of larger customers, thus providing the opportunity for bigger and more value - added transactions. size can also open the door into overseas markets. a case in point is that a bank needs to have assets of at least us $ 20 billion to be eligible to establish a branch in mainland china, which is at present beyond the reach of most local banks in hong kong. future profits may also benefit from cost reductions arising from economies of scale a€ “ that is, the ability to spread fixed costs, including particularly those which are technology - related, over a larger scale of operations. cost economies can also be achieved by eliminating duplications in branch networks, functions and staff. there may also be a reduction in risk, and therefore saving in costs, due to geographic or product diversification and the ability of larger institutions to invest in more sophisticated risk management systems. to the extent that risk reduction boosts a bank's credit rating, or increased size attracts the attention of investors, its cost of capital may be reduced, thus providing another means to increase shareholder value. of course, merger is not the only way to maximise value. nor, must it be said, is m & a always pursued for this reason. management may have its own motives for chasing size - personal ambition or herd " consolidation in the financial sector " : group of ten, january 2001, available at www. bis. org. instinct may also be part of the story. this may help to explain one of the paradoxes of the consolidation boom. lots of companies are doing it, but the success of m & a in achieving its stated objectives of cost and revenue synergies is not clear - cut. does m & a work? the g10 report to which i referred concluded, for example, that there was only weak evidence of cost reduction arising from increased size, except perhaps in the case of smaller banks. while there was stronger evidence for improvement on the revenue side, the gains were probably not as large as those anticipated by the practitioners. not surprisingly therefore, there was not much to show that, on average, m & a generated significant shareholder value. rather, what tended to happen was that there was a transfer of wealth from the shareholders of the acquirer to those of the target. other studies, and some well - publicised mergers that have failed to deliver the promised benefits, support this somewhat sceptical view. it is however