, Columnist
Singapore Banks' Slide Into Boredom
Investors shouldn't accept dwindling returns in exchange for rock-solid balance sheets.
This article is for subscribers only.
Are Singapore's banks turning boring again? Probably, yes. Are they making the slide into tedium worthwhile for shareholders? Maybe not.
Before the onset of the subprime crisis in the U.S., the three homegrown Singapore lenders -- DBS, Oversea-Chinese Banking Corp. and United Overseas Bank -- used to earn a humdrum 13 percent return on equity, compared with of 25 percent for large banks in Hong Kong, 20 percent in Australia and 19 percent in the U.K. Then the tables turned. While global banks had to load up on capital and drive down shareholder returns to bolster their balance sheets, strongly capitalized lenders in the Asian city-state found a great opportunity to finance China's credit bubble, as well as a red-hot property market at home.