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<TABLE cellSpacing=0 cellPadding=0 width=452 border=0><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published February 20, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Govt may point way but won't force banks to lend
Nor will it lend directly, says PM Lee, though it will do its best to keep credit flowing
By CONRAD TAN
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(SINGAPORE) The government will not lend directly to borrowers or force banks to extend credit despite their reluctance to lend, Prime Minister Lee Hsien Loong said yesterday.
<TABLE cellSpacing=0 cellPadding=5 width=120 align=left border=0><TBODY><TR><TD><TABLE cellSpacing=0 cellPadding=4 width=200 align=left border=0><TBODY><TR bgColor=#4e6e78><TD colSpan=2 height=8>[FONT=Verdana, Arial, Helvetica, sans-serif]Related link: </TD></TR><TR bgColor=#d5e9f1><TD>
</TD><TD>[FONT=Verdana, Arial, Helvetica, sans-serif][SIZE=-2]Click here to read the full text of PM Lee's speech[/SIZE][/FONT]
</TD></TR></TBODY></TABLE></TD></TR></TBODY></TABLE>Rather than 'substitute bureaucrats for bankers', it will continue to work through private-sector financial institutions to encourage lending on a commercial basis, he said.
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</TD></TR></TBODY></TABLE>'The government is in no position to tell banks whom to lend to. Nor is it desirable for the government to lend directly to borrowers who cannot get loans. But the government has a valid interest in keeping credit flowing, to avoid a negative spiral of credit and economic contractions.
'We do not want basically viable businesses to fail for lack of funds because lenders are too risk averse.'
Mr Lee was speaking at a gala dinner at the Shangri-La Hotel to celebrate the 150th anniversary of Standard Chartered Bank.
Total Singapore-dollar bank lending here fell in the last two months of 2008 as loans to businesses shrank, fuelling worries that as the recession progresses, more firms may be cut off from working-capital loans that they need to survive.
Since Feb 1, the government has offered to guarantee up to 80 per cent of the risk of new loans to small businesses, to encourage banks to lend to such firms.
Stanchart chief executive Peter Sands, who had flown in from London for the celebration, said that the bank was still 'very much open for business' for its customers across Asia, Africa and the Middle East.
And on Wednesday, OCBC Bank chief executive David Conner said that the bank had already approved several hundred million dollars worth of new loans under the latest government scheme to encourage bank lending and was working on more.
'More applications are coming in and we're processing them as fast as we can,' Mr Conner told reporters at a briefing to announce the bank's financial results.
Mr Lee said that with the government bearing most, but not all, of the risk of the loans, 'the banks have an incentive to assess loans prudently, but not too conservatively'.
It would be 'impossible' to guarantee that things would never go wrong, 'even if governments nationalise the whole financial industry, and substitute bureaucrats for bankers', he added. 'The key is to have a balance between market discipline and regulation.'
The government is also reviewing its regulatory regime, he said. 'Our basic framework has worked well, but we are scrutinising the system to minimise vulnerabilities.'
But Mr Lee assured the guests, which included many of Singapore's top bankers, that 'we will continue to allow free play and competition, to operate a disclosure-based regime, to rely on the market to allocate capital productively and to intermediate funds flows efficiently, and permit and indeed encourage creativity and innovation in the financial industry'.
He stressed that close cooperation between governments and regulators is needed for the world economy and financial sector to recover from the crisis, and said that it was crucial to resist protectionism.
In Singapore, 'while we take reasonable safeguards, we must stay open to the world', he said. 'Walling ourselves in does not mean that we would be safe; it just means we will starve.'
During the Asian financial crisis, 'the natural instinct would have been to hunker down and isolate our domestic markets to protect local financial institutions from competition', he said. Instead, Singapore did the opposite, opening up its financial sector to foreign players and exposing the local banks to greater competition to spur their development.
By encouraging foreign banks such as Stanchart to build a stronger presence here, the government also ensured that the banks are invested for the long term in Singapore, which makes 'a crucial difference' in times of crisis, he added.
'A bank with a long-term stake will consider the merits of borrowers who need financing to do business, and continue to nurture relationships with established clients, thus helping them and the economy to see through the crisis.' [/FONT]
</TD></TR></TBODY></TABLE>
Too bz fixing the Oppos for GE 2009. Mai kar cheow me hor! *hee*hee*
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Govt may point way but won't force banks to lend
Nor will it lend directly, says PM Lee, though it will do its best to keep credit flowing
By CONRAD TAN
<TABLE class=storyLinks cellSpacing=4 cellPadding=1 width=136 align=right border=0><TBODY><TR class=font10><TD align=right width=20>
</TD><TD>Email this article</TD></TR><TR class=font10><TD align=right width=20></TD><TD>Print article </TD></TR><TR class=font10><TD align=right width=20></TD><TD>Feedback</TD></TR></TBODY></TABLE>(SINGAPORE) The government will not lend directly to borrowers or force banks to extend credit despite their reluctance to lend, Prime Minister Lee Hsien Loong said yesterday.
<TABLE cellSpacing=0 cellPadding=5 width=120 align=left border=0><TBODY><TR><TD><TABLE cellSpacing=0 cellPadding=4 width=200 align=left border=0><TBODY><TR bgColor=#4e6e78><TD colSpan=2 height=8>[FONT=Verdana, Arial, Helvetica, sans-serif]Related link: </TD></TR><TR bgColor=#d5e9f1><TD>
</TD></TR></TBODY></TABLE></TD></TR></TBODY></TABLE>Rather than 'substitute bureaucrats for bankers', it will continue to work through private-sector financial institutions to encourage lending on a commercial basis, he said.
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'We do not want basically viable businesses to fail for lack of funds because lenders are too risk averse.'
Mr Lee was speaking at a gala dinner at the Shangri-La Hotel to celebrate the 150th anniversary of Standard Chartered Bank.
Total Singapore-dollar bank lending here fell in the last two months of 2008 as loans to businesses shrank, fuelling worries that as the recession progresses, more firms may be cut off from working-capital loans that they need to survive.
Since Feb 1, the government has offered to guarantee up to 80 per cent of the risk of new loans to small businesses, to encourage banks to lend to such firms.
Stanchart chief executive Peter Sands, who had flown in from London for the celebration, said that the bank was still 'very much open for business' for its customers across Asia, Africa and the Middle East.
And on Wednesday, OCBC Bank chief executive David Conner said that the bank had already approved several hundred million dollars worth of new loans under the latest government scheme to encourage bank lending and was working on more.
'More applications are coming in and we're processing them as fast as we can,' Mr Conner told reporters at a briefing to announce the bank's financial results.
Mr Lee said that with the government bearing most, but not all, of the risk of the loans, 'the banks have an incentive to assess loans prudently, but not too conservatively'.
It would be 'impossible' to guarantee that things would never go wrong, 'even if governments nationalise the whole financial industry, and substitute bureaucrats for bankers', he added. 'The key is to have a balance between market discipline and regulation.'
The government is also reviewing its regulatory regime, he said. 'Our basic framework has worked well, but we are scrutinising the system to minimise vulnerabilities.'
But Mr Lee assured the guests, which included many of Singapore's top bankers, that 'we will continue to allow free play and competition, to operate a disclosure-based regime, to rely on the market to allocate capital productively and to intermediate funds flows efficiently, and permit and indeed encourage creativity and innovation in the financial industry'.
He stressed that close cooperation between governments and regulators is needed for the world economy and financial sector to recover from the crisis, and said that it was crucial to resist protectionism.
In Singapore, 'while we take reasonable safeguards, we must stay open to the world', he said. 'Walling ourselves in does not mean that we would be safe; it just means we will starve.'
During the Asian financial crisis, 'the natural instinct would have been to hunker down and isolate our domestic markets to protect local financial institutions from competition', he said. Instead, Singapore did the opposite, opening up its financial sector to foreign players and exposing the local banks to greater competition to spur their development.
By encouraging foreign banks such as Stanchart to build a stronger presence here, the government also ensured that the banks are invested for the long term in Singapore, which makes 'a crucial difference' in times of crisis, he added.
'A bank with a long-term stake will consider the merits of borrowers who need financing to do business, and continue to nurture relationships with established clients, thus helping them and the economy to see through the crisis.' [/FONT]
</TD></TR></TBODY></TABLE>
Too bz fixing the Oppos for GE 2009. Mai kar cheow me hor! *hee*hee*
