Singapore Banks Gear Up to Cater to Multinational Companies: Singapore Incorporation
June 20, 2014 - Singapore
The three largest banks of Singapore - DBS, OCBC and UOB, have announced last week that they are preparing to cater to the global expansion of western multinational corporations (MNCs) in Southeast Asia (SEA). Singapore Incorporation believes that this would roll out the red carpet for MNCs to set up in Singapore, especially due to the strategic services that are offered by local banks to drive growth.
Even though the shockwaves of the 2008 financial crises have subsided, the fears of over-reliance on global banks are still reverberating among western MNCs. This has led them to consider Singapore’s safe local banks to assist in their plans to expand in the SEA region. Thus today BP, American materials giant 3M, oil services conglomerate Schlumberger, and the British aircraft engineering group Rolls-Royce are among the MNC clients of local Singapore banks.
“Large western companies are no longer comfortable with putting all their eggs in one basket. In this case, they are reducing their dependency on international banks due to counterparty risk. Instead, they now prefer a different kinds of banking, in a wide variety of businesses”, explained Ms. Jane Koh, Marketing Manager at Singapore Incorporation.
“However, this was not the case about three to five years ago. MNCs were not as keen to engage local banking services in Singapore as they are now. Now, with specialised finance professionals and strategic services to help grow international businesses, local Singapore banks are rising up to accommodate to the needs of MNCs in Southeast Asia”, she added.
According to DBS, which is Singapore’s largest bank by assets, two of these strategic services offered by local banks are cross-border trade flow facilitation, and working capital provision.
CROSS-BORDER TRADE FLOW FACILITATION
The repeal of an array of bureaucratic taxes and rapid industrialisation in SEA has paved the way for huge inflows of investments into the region. The growing affluence of SEA’s middle class has also helped the region grow as an economic bloc. Achieving an overall gross domestic product (GDP) of $2.3 trillion, which is greater than India, Russia and Brazil, SEA also maintains an enviable average GDP growth of 6%.
Many of these investments are managed through Singapore, which is increasingly becoming the popular launchpad of doing business in Southeast Asia. This has motivated local Singaporean banks to develop a range of schemes to help western MNCs manage their domestic and foreign trade transactions effectively.
For instance, DBS provides the Trade Global Export Management Solutions (GEMS) package, which is a bundled end-to-end solutions package that addresses various documentary credit needs for trade transactions. UOB and OCBC also offers a similar range of comprehensive solutions that serves as a bridge to the import and export of goods and services across national and regional borders.
WORKING CAPITAL PROVISION
Singapore’s local banks also possess a spectrum of financing solutions tailored to the needs of MNCs. OCBC’s Trade Credit Facility called Business TradeEASE, which is a credit line for trade activities. DBS too provides working capital for MNCs with their supply chain financing scheme, which liberates precious working capital that is trapped in their supply chain. DBS’s Internationalisation Finance Scheme also allows MNCs to borrow as much as S$30 million to fund their overseas expansion.
“MNCs are keenly looking to develop their businesses in the emerging markets of Southeast Asia, but in order for them to do so, they need the leverage and security that Singapore’s local banks provide. This has made it very viable for MNCs to form a company in Singapore”, said Ms. Koh.
About Singapore Incorporation (incorporation-singapore.com)
Singapore Incorporation is a one-stop solutions provider to companies and professionals who want to do business or work in Singapore. Other than starting companies, Singapore Incorporation also offers Singapore work pass, accounting and tax, as well as statutory compliance services.
Source: Business Wire India