PM Lee Hsien Loong at the 80th Anniversary Celebrations of the United Overseas Bank

Mr Hsieh Fu Hua, Chairman of UOB
Dr Wee Cho Yaw, Chairman Emeritus and Advisor
Mr Wee Ee Cheong, Deputy Chairman and CEO
Distinguished guests, ladies and gentlemen

I am happy to join you this evening to celebrate the 80th anniversary of the United Overseas Bank.

History and Success of UOB

During the Great Depression in 1935, a group of Hokkien Chinese businessmen pooled their resources to set up the United Chinese Bank (UCB). The largest shareholder, Datuk Wee Kheng Chiang, became its first chairman. The bank had humble beginnings. It operated from a single branch bank in rented premises of Bonham Building, located in today’s Boat Quay. It was principally engaged in short-term loans to a segment of local businessmen, to be precise, Hokkien Chinese businessmen. Modest as its operations were, UCB was a vote of confidence and an investment in the future of Singapore. As it turned out, it was a testament to the foresight of its chairman and founders.  

80 years on, the bank, by now renamed the United Overseas Bank, has much to celebrate. UOB Group operates a network of 76 branches across Singapore, and over 520 offices in 19 countries and territories, ranking among the top foreign banks in Malaysia, Thailand and Indonesia. From working capital loans to Hokkien towkays, it now offers a full suite of services – consumer banking, wealth and asset management, corporate finance, trading, and investment banking – to individuals, SMEs, and large corporates. From a capitalisation of just S$1 million at the beginning, UOB now holds over S$300 billion in assets. Ranking it among the world’s top 100 banks by assets, and among the top 40 in Asia, and Bloomberg counts UOB as amongst the top 10 strongest banks in the world. 

A Robust and Dynamic Banking Sector

This year, we have also been celebrating SG50 – our country’s 50th year of independence. UOB’s success story unfolded against the backdrop of Singapore’s progress as a nation with strong fundamentals. An economy that is vibrant, open and continues to grow. A track record of political stability, prudence and responsible fiscal management. A sound regulatory regime that is governed by the rule of law. A people who are well-educated, highly skilled and hardworking. 

In the late 1960s, the Government decided to build up the financial industry, both as a promising economic sector in itself, as well as to support the broader economy. In the first phase, we focused on building up the strength and resilience of our banks, and on creating an Asian dollar market. The Asian dollar market took off and as the economy grew, our local banks grew too. In 1997, we decided to shift gears and liberalise the financial sector, allow more free play and international competition because even though we had a safe, sound and reliable financial institutions, the industry was not as efficient, innovative and responsive to the market as it could and should have been. In banking, we progressively opened up to foreign players, including opening up the domestic retail market. This more competitive environment forced our local banks to consolidate but it also spurred them to upgrade, innovate and grow. With the help of MAS, our local banks were able to develop and hold their own, despite the tougher competition anda more bracing environment.

Our strategy has worked. The local banks, including UOB, to their credit, have consolidated and grown. Today, our three Singapore banks have gained a reputation for being amongst the strongest and safest financial institutions in the world. We have a strong, vibrant financial sector that we can be proud of. One which has continued to grow throughout the Global Financial Crisis, when many financial centres around the world suffered major setbacks and shrinkages. A financial sector which is a key contributor to our economy, making up 12.5% to our GDP and employing close to 140,000 Singaporeans.

Future of Banking

Looking ahead, the banking industry is entering a challenging phase. The wider economic environment is uncertain. Global growth is lacklustre despite recent hopeful signs of a US pick-up. There is more than a chance of a regional slowdown, with slower growth in China and interest rates have been low for a prolonged period, crimping net interest and investment income. At the same time banks are facing tighter regulations,post-crisis, with higher capital and liquidity requirements and more intensive and intrusive supervision.

The operating environment has become more challenging, but on top of that, technology is moving very fast with new business models disrupting traditional banking. For example, more and more people are making payments through their smartphones. You can pay for taxis, book movie tickets, shop online, transfer money, pay for goods at restaurants and shops, give “angpaos” all on your smartphone. Yesterday was 11 November, in China they call it双十一, Singles Day. Shoppers racked up in one day with Alibaba more than $14 billion of sales with 70% of the value done through mobile purchases. So payment modes are changing. I think banking operations are also changing. Companies are also finding new ways to assess loan-worthiness. No longer just using credit-bureaus, which are traditionally the preserve of banks but using other data collected about potential borrowers like their smartphone usage patterns, social network and living habits to assess whether a person is credit worthy. The insurance industry is finding new ways to assess risks, set premiums, and incentivise behaviour. For example, by monitoring their policyholders’ wearables, they can offer discounts on premiums to those who lead healthier lifestyles or through telematics, they can offer lower car insurance premiums to drivers who have safe driving habits. That is just the consumer side of financial services.  There are other technologies like blockchains which is used for bitcoin but can also be used for many other applications like real-time gross settlement or trade finance verification.

Our banks and our regulators MAS must keep up to date and up to scratch with these developments. The banks are in a strong position. They are in the heart of a rising Asia. The banks have strong balance sheets and with a strong regional presence, they can take advantage of many opportunities around them. But at the same time, they have to know that this is a very competitive business that continues to evolve rapidly. So we have to keep on upgrading our technologies, services and business models. For while overall our banks are quite good, in almost every specific area, we can find other banks in the world who are better than us. 

In terms of digital banking, there are outstanding models in the US and Australia that offer a wide range of products and services, have clear and simple interfaces, and help customers to tackle financial decisions. For mobile payments, China, I told you about Alibaba; South Korea, you can pay for many things with your handphone and even in Africa, countries like Kenya where it is very popular and convenient. If you look at credit assessments, there is pervasive use of technology in US and China. So we have to continually innovate and keep up with the latest technologies and services to balance between risk-taking and caution. I am happy that several leading banks and insurance companies have set up innovation labs in Singapore to design, test-bed and develop products and services for their Singaporean and global customers. MAS has to stay updated. Know what new risks are emerging but also allow new activities in a controlled way, so that as not to stifle innovation but in fact promote it with safety and prudence.

Taking the Legacy Forward

The Chinese have a saying: 创业难，守业更难 – tough as it is to establish a business, it is tougher still to carry it forward

Mr Wee Cho Yaw is living proof of how it is possible to build and expand upon what you have inherited. His father built the bank. He took it over, led UOB for over 40 years, and made UOB a major player in the region.    But the story does not end, and the bank must continue to move forward and a new generation must build and expand what Mr Wee has done. Just as the Government needs political succession, so too banks must plan for their leadership succession. Eight years ago, Mr Wee handed over to a new CEO Mr Wee Ee Cheong and two years ago, he handed over the Chairmanship to a new Chairman Mr Hsieh Fu Hua. The new team has built on his solid achievements and they must continue to build up robust board processes and groom the next generation of leadership. Then UOB can scale new heights and continue to succeed for many years to come. 

Finally, let me thank UOB for their $2 million donation to the People’s Action Party Community Foundation (PCF). The PCF aims to give our children a good head-start in preschool education and childcare so that every child in Singapore, no matter what his background or family circumstances, has the opportunity to fulfil his full potential. UOB’s generous donation will be very helpful to PCF’s work in nurturing the next generation for Singapore

So congratulations again to the Board, management and all staff of UOB and the whole UOB family past and present, on the bank’s 80th year. In Chinese they say it is 大寿, it is a great birthday. Happy birthday to you all! Thank you very much. 

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