Singapore Bank

GDP at Current prices and PPP |€ 210 billion | |

|Inhabitants |4.48 million |

|GDP per head |€ 46,832 |

|Economic growth rate |8.1% |

|Consumer confidence indicator | 111 |

|Unemployment rate |2.7% |

|Consumer Price Index |1.0% |

|Banking staff |106,300 |

|Number of branches |200 |

|Number of ATMs |1,590 |

|Households savings ratio |- |

|Inflation rate |1.0% |

|Interest rate, consumer credit |17.80% |

|Interest rate, residential mortgage | 5.73% |

|Interest rate on long term bonds |3.05% |

Type and size of players

Net Banking income (in million SGD)

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% Total assets

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* The Singapore retail banking industry is dominated by 3 major banks, as a group forming approximately 67% of total assets.

* The remaining 33% is occupied primarily by foreign banks and specialist finance companies.

Products

% Market Share

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Loans

* Singapore's robust economic growth, low unemployment and inflation have promoted high consumer confidence and the continued uptake of loans throughout the market. In particular, Singapore's property boom continues to drive loan growth as Singapore's major domestic banks each recorded a significant increase in loan activity in their 3rd quarter results (OCBC: 15%, DBS: 23%, UOB: 15.6% over the 3rd quarter in 2006).

* Following the shocks of the US sub-prime credit crisis, Singapore's major banks have emerged relatively unscathed as CDO's (Collateralised Debt Obligations) form only a small portion of their total assets. Of the major banks, OCBC has adopted the most conservative position, as it sets aside $221 million in loan loss provisions for asset backed CDO's. Additionally, some banks have noted they expect greater pressure on interest margins due to the higher cost of credit given ongoing liquidity challenges.

Credit cards

* Singapore's major banks have responded to continued growth in personal wealth and saturated market conditions by moving towards 'lifestyle-centric' and premium card products. These cards offer exclusive discounts and benefits, which are tailored to specific demographic segments of the population. For example, the DBS Women's card offers shopping deals, concierge services and special healthcare privileges.

* Banks have also moved to co-brand their cards with retailers (eg. OCBC's Ikea friends card), and more recently have also introduced a selection of 'designer' card styles, as they seek to better identify with a cardholders personality.

Trends

Regulatory changes

* Singapore continues to refine it's regulatory framework with plans to amend the Securities & Futures Act (SFA) and the Financial Advisors Act (FAA). Such changes are intended to strengthen safeguards and enhance the flexibility of the regulatory environment as Singapore consolidates its position as a regional trade hub. This follows changes in early 2007, wherein the MAS was given enhanced powers in relation to distressed or insolvent banks.

* The anxiety surrounding the credit crisis in the US sub-prime market has extended through to Singapore and in response the MAS has streamlined the process used by banks to draw down liquid reserves. Concurrently, the MAS is continuing to reform its liquidity risk supervision framework as it moves towards allowing banks to hold a broader range of assets to better manage liquidity risks.

Business model

* Following moves by the MAS to liberalise the banking sector, consolidation pressures have eased as robust economic growth coupled with a booming property market have sustained strong company results. Instead, the focus of major banks has shifted overseas, as banks seek to tap into regional markets to support their next phase of growth. To this end, Singapore's major banks have established representative offices in Hong Kong, India and South-east Asia. Most recently, Singapore's banks have made efforts to expand into China as the big 3 make strategic investments in local institutions and move to establish locally incorporated operations. May 2007 also saw the establishment of Singapore's first locally based Islamic bank, the Islamic Bank of Asia.

* On the domestic front, Singapore's major banks are looking to tap into the burgeoning mass affluent market as the positive economic climate continues to fuel growth in personal wealth. Banks continue to pursue the elusive goal of leveraging established transaction banking relationships to cross sell asset management and premium banking services. An increased focus on wealth management has seen the start of a 'war on talent', as demand for wealth managers