Singapore Bank Sees Southeast Asia as a ‘Haven’ From the Trade War
United Overseas Bank distances itself from the upcoming U.S-China Trade war
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United Overseas Bank Ltd. is betting Southeast Asia will shield it from the escalating trade war between the U.S. and China, distancing itself from the approach of its two main rivals that have expanded their focus to Hong Kong and the mainland.
“Asean will become a safe haven,” Chief Executive Officer Wee Ee Cheong said in an interview at UOB headquarters in Singapore, referring to the Association of Southeast Asian Nations.
Founded by his grandfather in 1935, Wee’s bank is taking a distinct path from its larger Singaporean rivals which took over lenders in Hong Kong as a gateway to mainland China, the engine of Asia’s growth in the past two decades. Now the tides are turning as the U.S.-China trade war enters a new phase with rising tariffs that will hit Asia’s biggest economy.
“Hong Kong is a city. It is just part of China,” said Wee, 66. Most of the banking industry in the city is controlled by HSBC Holdings Plc, Standard Chartered Plc and Chinese banks, he said. “No matter how big you buy, you are just a marginal player.”
Oversea-China Banking Corp., Southeast Asia’s second-largest lender, spent about $5 billion buying Wing Hang Bank in Hong Kong in 2014 after DBS Group Holdings Ltd. bought Dao Heng Bank in 2001. Both firms are expanding in China’s Greater Bay Area strategy that connects Hong Kong to major coastal cities on the mainland to form a new technology and economic hub.
UOB isn’t shunning China entirely. While the bank wants to sell its 13% stake in Hengfeng Bank on the mainland, which it bought in 2008, it plans to deploy capital by increasing the number of its own branches there, Wee said. “I would rather grow myself,” he said. The bank also has wholesale banking operations in Hong Kong and the mainland that capture investment and business flows between Greater China and Southeast Asia.
Family Business
Wee’s focus on Southeast Asia carries on a presence built in the region mostly by his billionaire father Wee Cho Yaw, who ran the bank from 1960 to 2007. His grandfather Wee Kheng Chiang established the family’s first bank in Malaysia’s Sarawak in 1924 before founding Singapore’s UOB in 1935.
With 10 nations and 650 million people, Asean boasts a combined economy that’s bigger than India’s and is forecast to be the world’s fourth largest by 2030. It will have three of the seven fastest-growing economies over the next decade, based on Standard Chartered’s projections.
Wee highlighted Japanese automakers’ investment in Southeast Asia as an example of the region’s attractiveness. Suzuki Motor Corp. is targeting Thailand and large car manufacturers are going to Myanmar, he said.
For its expansion in the region, the bank is planning to use digital technology and artificial intelligence, rather than acquisitions, he said. It’s rolling out its TMRW digital bank in Thailand and will introduce it in Vietnam, Indonesia and possibly Malaysia. UOB will also add branches selectively in emerging markets, he added.
UOB shares have fallen 1.9% this year, while the Straits Times Index of Singapore stocks rose 3.1%.
Wee also highlighted differences with UOB’s rivals on its approach to expanding the wealth management business. He said the bank will rely on its strength in commercial banking to cross-sell products to business owners, rather than buy assets from other banks. DBS and OCBC have grown their wealth businesses partly through acquisitions.
“It’s not a question of conservative,” Wee said, referring to the wealth strategy. “We’re low-key. We’re practical.”
To contact the reporters on this story: Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net;Joyce Koh in Singapore at jkoh38@bloomberg.net;Revathi Valluvar in Singapore at rvalluvar@bloomberg.net
To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Russell Ward
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