Singapore to open up non-bank finance companies to foreign M&As

Hong Leong Finance

14/02/2017 05:13

SINGAPORE, Feb 14 (Reuters) - Singapore will for the first 
time allow foreign takeovers of non-bank finance firms as part 
of steps to strengthen their financial resilience and 
operational flexibility, the central bank said on Tuesday. 
    "This will accord finance companies greater flexibility to 
explore strategic partnerships and innovative business models," 
the Monetary Authority of Singapore (MAS) said in a statement, 
doing away with regulations barring such takeovers. 
    The new rule is effective immediately. 
    The central bank said it is now prepared to consider an 
application for a merger or acquisition if the prospective 
merger partner or acquirer commits to maintaining financing to 
small and medium-sized enterprises (SMEs) as a core business of 
the finance company. 
    The merger partner or acquirer must also be able to 
demonstrate expertise in SME financing and present proposals to 
enhance the finance company's SME lending activities with new 
technologies, methodologies or business models, the MAS said. 
    Singapore has three financing companies - Hong Leong Finance 
Ltd  HLSF.SI , Sing Investments & Finance Ltd  SINV.SI  and 
Singapura Finance Ltd  SBDS.SI . 
    Shares in Hong Leong Finance were up 5.7 percent on Tuesday, 
while Sing Investments & Finance Ltd's share rose 2.4 percent 
and Singapura Finance Ltd shares gained 9.3 percent.  
    The MAS said it would also ease restrictions on unsecured 
business loans by finance companies to bolster their ability to 
provide unsecured loans to SMEs, as part of other regulatory 
changes to be phased in this year.       
    This includes raising the limit on a finance company's 
aggregate uncollateralised business loans to up to 25 percent of 
its capital funds, from the current 10 percent. 
    As of the second quarter of 2016, the three financing 
companies combined accounted for just under S$7 billion of 
outstanding loans to SMEs, or about 8.5 percent of the total 
amount of outstanding loans to SMEs in Singapore. 
 
 (Reporting by Masayuki Kitano; Editing by Shri Navaratnam) 
 ((masayuki.kitano@thomsonreuters.com; +65-6417-4682; Reuters 
Messaging: masayuki.kitano.thomsonreuters.com@reuters.net)) 
 
Keywords: SINGAPORE FINANCE/CENBANK