SINGAPORE BANKS SAY DIVERSIFICATION KEY TO GROWTH

  Singapore's major banks are
  diversifying and gradually shifting their asset holdings from
  loans to debt instruments, banking sources said.
      The banks following the trend are the &lt;Overseas Union Bank
  Ltd>, &lt;United Overseas Bank Ltd>, &lt;Oversea-Chinese Banking
  Corporation> and the &lt;Development Bank of Singapore Ltd>.
      The shift towards securitisation has been helped by
  volatile financial markets which have developed hedging
  facilities such as floating rate notes and bonds for risk
  management, said Overseas Union General Manager Loh Hoon Sun.
      Loh told Reuters in an interview that Singapore banks see
  limited growth in credit risk. More and more of them are
  switching from term lending to major growth areas such as
  stockbroking and fee based income, he said.
      Major local banks ventured into stockbroking after being
  granted seats on the stock exchange. Bankers said they are now
  moving into the new government securities market and the Stock
  Exchange of Singapore Dealing and Quotation System.
      One foreign banker said the Development Bank and the
  Overseas Union Bank Ltd have become major players in the equity
  market in Singapore.
      Loh said the banks' participation in the stock market has
  increased business transactions and provided long term growth
  for the market. The banks are not competition for individual
  stockbroking firms because of the increased business they
  generate, he added.
      Loh said the Stock Exchange of Singapore might expand
  equity issues by as much as one billion dlrs this year because
  of the increasing ability of foreign and local market
  participants to absorb new issues.
      Loh said &lt;OUB Investment management Ltd>, a subsidiary of
  the Overseas Union Bank Ltd, has teamed up with a U.K. Firm to
  launch the Union Global Fund. The fund is for local investors
  seeking capital growth through a diversified international
  portfolio. It will invest in international shares with the
  emphasis on U.S. And Japanese markets, he said.
      &lt;DBS Securities Singapore Pte Ltd>, a subsidiary of the
  Development Bank of Singapore, has applied to the Hong Kong
  Stock Exchange to set up a Hong Kong stockbroking firm.
      Loh predicted fixed deposit and prime interest rates in
  Singapore will stay low this year. As a result, banks will be
  forced to provide fund management services for major clients
  seeking better returns, he said.
      Economic analysts and bankers are optimistic the major
  banks will show profits in 1987, helped by higher income from
  treasury and investment banking activities.
      They expect the 1987 after-tax profits of Oversea-Chinese
  and United Overseas to show stable growth of four to eight pct
  against respective gains of four and seven pct in 1986.
      Overseas Union's profits are expected to jump to over 40
  mln dlrs from seven mln dlrs in 1986, economists said.
      The Development Bank's after-tax profits rose 39.2 pct in
  1986 mainly due to a dividend of 20.4 mln dlrs paid by
  &lt;National Discount Company Ltd> before it became a subsidiary
  of the bank, they said.
  

