Wednesday, June 25, 2014

SG Banks

Banks: A framework for domestic systematically important banks (D-SIBs) is in the works. The immediate implication is that foreign banks with a large retail presence will have to locally incorporate their retail units. A bank is deemed to have a significant retail presence if it has market share of resident non-bank deposits of 3% or more, plus it has at least 150,000 depositors with accounts of less than or equal to $250,000. Maybank-KE guides little implications for now, but competition could intensify. This is as systematically important banks would want to go up the risk curve tin search of higher returns to commensurate the higher capital requirements. Nevertheless, Maybank-KE remains Overweight on banks, with the following ratings: DBS: Maintain Buy with TP of $20.70 UOB: Maintain Buy with TP of $25.70 OCBC: Maintain Hold with TP of $9.63

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