lee hsien loong : consolidation and liberalisation : building world - class banks speech by mr lee hsien loong, deputy prime minister of singapore and chairman of the monetary authority of singapore, at the association of banks annual dinner, singapore, 29 june 2001. * * * introduction two years ago, mas embarked on the first phase of a programme to liberalise the banking industry. the aim was to strengthen our local banks through competition, provide singaporeans with quality banking services, and enhance singapore's position as an international financial centre. we phased in the liberalisation measures progressively, to give local banks time to upgrade themselves to meet the competition, and maintain the stability of the financial system. the first package of measures in 1999 comprised a few main elements. mas permitted 4 qualifying full banks ( qfbs ) to establish up to 10 locations each, relocate their existing branches and share atms among themselves. we granted 8 new restricted bank licences to banks that wanted to expand their wholesale s $ business. we also gave offshore banks more flexibility to lend in singapore dollars and engage in s $ swaps, and even wider leeway to 8 qualifying offshore banks. these measures marked the start of a major and irreversible process of change. we could not foresee exactly how the industry would respond and develop. so mas committed to reviewing progress at the half - way mark before deciding on further liberalisation measures. we have now completed this review. local banks'upgrading and consolidation since the first liberalisation package was announced, the local banks have made progress in building up their capabilities. they have generally strengthened their management teams, and invested heavily in infrastructure to provide banking services more efficiently, especially via electronic channels. they have improved their customer relationship management systems, which will allow more effective data mining of their customer databases and cross - selling of multi - sector products. local banks have also been seeking opportunities and expanding their presence in the region. an important and more visible sign that local banks are gearing up for competition is of course the process of consolidation that is underway. the opening gambit was made on 12 june when ocbc announced that it was making a voluntary general offer for keppel capital holdings which owns keppel tatlee bank. ten days later, dbs made an unsolicited bid for oub. and just three hours ago, uob made a competing bid after reaching agreement with the controlling shareholders of oub. all the local banks are now busy reassessing

will deliberate at length a strategic review of the seacen centre during the conference. this is an opportunity for governors to re - examine the relevance of seacen activities, and explore ways in which seacen can better serve its members. seacen has to reposition itself to meet the challenges of the new globalised economy. conclusion we have a full and demanding agenda ahead of us. at the same time, the conference tomorrow will allow us to share experiences and exchange ideas, as well as strengthen existing relationships and forge new friendships. i would also like to wish all participants a pleasant stay in singapore. i now have the pleasure of declaring the 36th seacen governors conference open. enjoy the evening. thank you.