Companies go 'speed dating' in race for Singapore digital bank licences-sources

Great Eastern Holdings

03/12/2019 02:41

* Potential bidders teaming up for Singapore
licences-sources
    * Partnerships combine banking, tech expertise and capital
    * Up to 5 successful applicants to be announced in mid-2020
    * Singapore licence could offer route to expand regionally

    By Anshuman Daga
    SINGAPORE, Dec 3 (Reuters) - About three dozen firms
including ride-hailer Grab, Standard Chartered  STAN.L  and
Singapore Telecommunications  STEL.SI  are in talks to form
consortiums that can meet tough entry norms to bid for
Singapore's digital bank licences, sources said.
    Singapore's biggest liberalisation of its banking sector in
two decades seeks to enable online-only banks that can operate
at lower costs and therefore offer different services than those
of incumbents including DBS Group  DBSM.SI  and OCBC  OCBC.SI .
    But some conditions are stiffer than in other markets such
as Hong Kong, including requiring S$1.5 billion ($1.1 billion)
in paid-up capital for retail banks and local control. This is
necessitating bidders to team up to combine banking know-how,
consumer facing technology expertise and deep pockets.
    Many firms are locked in last-minute negotiations to meet
the year-end deadline for bidding, said the sources who were not
authorised to speak to the media.
    "There is a lot of speed dating going on," said Varun
Mittal, who heads the emerging markets fintech business at
consultancy EY.
    Singapore's central bank will issue up to two retail and
three wholesale bank licences. Retail banks can accept deposits
from and offer services to both retail and non-retail customers
but must be led by a Singapore-based company. Wholesale banks
will mostly serve small and medium enterprises (SMEs).
    "Even today, SMEs have great difficulty getting working
capital finances because the kinds of credit evaluation and
collateral that need to be committed don't work for them, but
for bigger corporations," said Shailesh Naik, CEO of fintech
firm MatchMove, which is exploring joining a consortium.
    Grab, Singtel and Standard Chartered confirmed their
interest in a licence but declined to specify details.
    Alibaba Group  BABA.N  affiliate Ant Financial and Singapore
gaming company Razer  1337.HK  are among others considering
seeking licences.
    Sources said Chinese insurer Ping An  601318.SS , a
consortium including Singapore tycoon Ron Sim's holding company
V3, and others such as insurer Great Eastern  GELA.SI  are also
interested. The companies declined to comment.
    Divyesh Vithlani, who leads Accenture's financial services
practice in ASEAN, said some applicants were teaming up to
provide SMEs with accounting, payroll or insurance services as
well as banking.
    
    REGIONAL ASPIRATIONS
    Some contenders hope their wide-ranging customer data
combined with new technology and nimble operations will help
them win customers in a Singapore banking market that has over
150 deposit-taking institutions, with total assets of about $2
trillion.
    For companies with regional aspirations such as Grab and
Ant, a Singapore banking licence could offer a stepping stone to
expanding in larger Southeast Asian markets as the region
embraces an era of digital banks.
    "The play needs to consider not only the local for local
game but also the bigger prize that's out there around the
cross-border activities," said Mohit Mehrotra, head of
Deloitte's strategy practice in Asia Pacific.
    Singapore's initiative follows moves elsewhere including in
Hong Kong, which issued eight online-only banking licences, four
to consortiums.
    The city-state is set to announce the winners in mid-2020
and the digital banks are expected to start operations in a
phased manner from mid-2021.  urn:newsml:reuters.com:*:nL3N21E28U

 (Reporting by Anshuman Daga; Additional reporting by Alun John
in Hong Kong; Editing by Muralikumar Anantharaman)
 ((anshuman.daga@tr.com; +65 64035676; Reuters Messaging:
anshuman.daga.thomsonreuters.com@reuters.net))