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Singapore: Outwards and upwards

Having pursued a dirigiste approach to local non-financial companies in the 1990s, encouraging expansion abroad and regional leadership, the Singapore government has now turned its attention to the banks, urging liberalization, consolidation and outward-looking expansionism. It can't force the banks to do what it wants. But it gets very cross when they don't.

Lee Kwan Yew was in Fighting form. The former prime minister of Singapore, now armed with the intriguing title of senior minister, had already made some disparaging remarks about the "local Chinese banks" during his speech at a dinner towards the end of last year, but now he was homing in on one in particular. If anyone present happened to hold shares in United Overseas Bank, he said, they might like to consider selling them.

It took a few seconds before the audience - many of them journalists since the dinner was at the foreign correspondents' club - digested his comments. It seemed an extraordinary statement for any minister to make, but for Lee to say it meant there had to be a big rift between the government and the bank.

Lee has dominated Singapore political life since the early 1960s. He also regards himself as the architect of the Financial reforms introduced since 1998. He joined the advisory board of JP Morgan in 1992, and over the next few years his experience there led him to regard Singapore's protectionist approach to Finance as increasingly counter-productive.

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