Singapore bank chiefs see opportunities arising from China, geopolitics

THE current global geopolitical situation will enhance Asean as a destination for supply chain financing - an opportunity that banks here should seize, said Wee Ee Cheong, the new chairman of the Association of Banks in Singapore (ABS) on Thursday.

Mr Wee, who is deputy chairman and CEO of UOB, was speaking at a fireside chat on the banking sector as part of a panel on the evening of ABS' annual general meeting. The event was held at the Ritz-Carlton Millenia.

He also listed sustainability, and attracting and retaining talent as key areas on which the financial services sector here should focus.

"If you don't have smart people, how are you going to be a smart nation?" he quipped, adding that the bank is intent on growing its own talent.

Outgoing ABS chairman and fellow panellist Samuel Tsien, who will be retiring from his post as group CEO of OCBC on April 14, pointed out that Singapore needs to build on its role as a hub to seize opportunities coming from China.

With China emerging stronger after the crisis, at least relative to other parts of the world, there will be more activities driven out of the world's second largest economy, he noted.

Singapore will need to find ways to capture that, whether it is in the form of the relocation of factory plants or the Asean-China corridor.

"I think that represents a good area for us to delve into to find new opportunities," he said.

With Singapore emerging from the crisis well, Mr Tsien noted that the Republic's technology and digitalisation efforts are now recognised around the region.

"What is it that we can do for the region, in such a way that we will be able to bring activities through Singapore into other parts of the region, will be a very important part for us to continue to look at," he said.

Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), concurred that the rise of Asia and China will continue to shape opportunities for Singapore.

This comes as Singapore made a name for itself as a beacon of stability during the pandemic, he noted.

"I think after Covid-19, there's a lot more premium placed on those qualities of trust and resilience," said Mr Menon, who was the third and final speaker on the panel.

"We are the conduit through which the rest of the world comes into Asia, and we want to be the conduit through which Asia reaches out to the rest of the world."

During the 45-minute session, Mr Menon also flagged building digital foundational infrastructure as a priority that the financial industry need to collaborate and work on.

While the first attempt at MAS' electronic know-your-customer (e-KYC) project failed, the financial regulator is giving it another go.

"I'm really hoping that over the next two years, we can make a serious dent in this, and create a first of its kind infrastructure in the world that will allow the banks to cooperate and address this problem," he said. The e-KYC utility aims to create a more efficient way of checking against sanctions and blacklists, as well as reducing the risk of financial crime and making it easier for legitimate customers to bank here.

Another key focus for banks here at this juncture would be the industry's transition from the Swap Offer Rate (SOR) to Singapore Overnight Rate Average (Sora).

In his reflections on the past year, Mr Tsien said that the most difficult project he has worked on was the transition to risk-free rates.

"The SOR to Sora is a very difficult process because nobody knows how to do it. No jurisdiction has done it yet," said Mr Tsien. "We are playing a leading role in making sure that we will be ahead of the game to move towards that direction, because the transition has to be complete by a certain time."

Singapore is in the midst of its move from SOR to Sora as the new interest rate benchmark. This comes on the back of the discontinuation of the scandal-tainted London Inter-Bank Offered Rate (Libor) at end-2023, which would affect SOR as it uses the USD Libor in its computation.

Finally, Mr Wee also shared his vision on his incoming chairmanship. Banks will have to be strong to ensure that they can support the real economy, and this includes being prepared for the rollback of government relief programmes, he noted.

"In the area of digitalisation, we need to focus on the big things that will move the needle," he said. This will mean hiring and training technologists and engineers, who are in short supply, he added.

The fireside chat was moderated by Annie Koh, Professor Emeritus of Finance (Practice), Singapore Management University.