OWNERSHIP STRUCTURE OF LOCAL BANKS IN SINGAPORE

Abstract

Singapore has established herself as a rapidly expanding financial centre in the Far East. The local banks, having evolved from the early trading and entrepot economy, were instrumental in the development of the financial services sector. However, little has been done to study the special characteristics of the local banks and their past and possible future role in Singapore's economy. This study attempts to delve into who owns the banks and what the banks own, and the implications of linking these two aspects of ownership. The study of the ownership structure of the local banks can give us an insight to the extent of the influence of the local banks in the financial sector. Ownership of a company often confers the privilege of control. Hence, who the majority shareholders of the banks are would determine the policies and direction of the bank. Local banks, in which the majority shareholders are from the founding families of the banks, tend to be more conservative. The owned DBS Bank, is a commercial bank which also provides financing for development projects. Moreover, it appears to be the government's instrument to provide direction to the banking sector. A look at what the local banks own reveals an extensive network of subsidiary and associated companies in almost every facet of the financial sector. This suggests that their influence stretches beyond commercial banking activities. Thus, when these findings are linked with the ownership of the banks, it would suggest that a large part of the financial centre is indirectly owned by the majority shareholders of these local commercial banks.