Asia Times: Singapore prepares to free up SingTel, DBS Bank


	March 15, 2001	atimes.com

Southeast Asia

Singapore prepares to free up SingTel, DBS Bank

SINGAPORE - The Singapore government is prepared to reduce significantly over the medium-term its stake in two of its biggest government-linked companies (GLCs), Singapore Telecommunications and DBS Bank.

"For SingTel, we will remove the special share that gives the government the right to veto major decisions in the company. Instead we will meet our national security needs through appropriate safeguards," Deputy Prime Minister Lee Hsien Loong said. The announcement comes in the wake of a widely-publicized bid by SingTel for Australian telecom Cable & Wireless Optus.

The government has a 78 percent stake in SingTel and owns 37 percent of DBS Bank. Lee said while SingTel and DBS Bank were large at home, they were small by world standards and to become significant players, they had to evolve into more than being Singaporean companies. How the divestments in the two companies would be made was being studied and could take place such as through dilution by merger and private sale to institutional buyers, he added.

For DBS Bank, the government would ensure that the "Singaporean character" of the bank was preserved with any divestment, Lee said, adding that the Banking Act and Monetary Authority of Singapore (MAS) regulations would ensure that local banks retained their commitment to Singapore even if they formed strategic linkages or mergers with foreign partners.

Currently, MAS approval is needed for a single shareholding that exceeds thresholds of 5 percent, 12 percent and 20 percent in a local bank and half of the board of directors must comprise Singapore citizens or permanent residents.

However, the composition of board might need to be modified if there was a merger with a partner of comparable size that could contribute to the bank's growth and continued commitment to Singapore, he said.

Lee, who is also MAS chairman, said many countries treated certain industries as strategic and fundamental to national interests and were cautious of allowing foreign players, especially those with significant government ownership, to enter their domestic markets.

SingTel and DBS Bank, he said, had encountered problems in regional ventures because of perception that the GLCs were controlled by the Singapore government "operating on an agenda that overrides normal commercial consideration".

On the planned public offer of two other GLCs, port operator PSA Corporation and Singapore Power, Lee said the timing for PSA had to be carefully studied in view of uncertain market sentiment. He said the company was in the final stages of due diligence, while the preparation for Singapore Power was not as advanced.

The government also planned to divest three power generation companies, Power Seraya, Power Senoko and Tuas Power. Lee said the government's shareholding in GLCs were not sacrosant and it would consider local or foreign bids for the companies.

(Asia Pulse)

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©2001 Asia Times Online Co., Ltd.