Singapore Economic News

[corydorus]

Oil and Gas hit us badly. The low interest rate actually make it worst because it allow this inefficient industry to be prolonged instead of being restructured. What makes it even worst is the locals banks tapped retailers money cheaply to finance them. Maybe this Game needs to end.

[cfa]

Believe Spore will not benefit from the China's OBOR project like other SEA countries .

[CY09]

Oil and Gas hit us badly. The low interest rate actually make it worst because it allow this inefficient industry to be prolonged instead of being restructured. What makes it even worst is the locals banks tapped retailers money cheaply to finance them. Maybe this Game needs to end.

That's why we locals are not very smart and support local banks especially our national bank by putting a lot of our deposits with them. Dbs has the most cash parked, the lowest interest bearing assets; but thanks to our locals support has the highest net interest margin.

In a way, it is our ownself to blame for the crisis. If there is less deposits for dbs to handle, they will be more prudent in their loan selection.

[Account holder with less than 5000 with dbs]

[corydorus]

Oil and Gas hit us badly. The low interest rate actually make it worst because it allow this inefficient industry to be prolonged instead of being restructured. What makes it even worst is the locals banks tapped retailers money cheaply to finance them. Maybe this Game needs to end.

That's why we locals are not very smart and support local banks especially our national bank by putting a lot of our deposits with them. Dbs has the most cash parked, the lowest interest bearing assets; but thanks to our locals support has the highest net interest margin.

In a way, it is our ownself to blame for the crisis. If there is less deposits for dbs to handle, they will be more prudent in their loan selection.

[Account holder with less than 5000 with dbs]

Cash has to put somewhere. If is in normal deposits account is still not that bad because if the bank lends out the money to weak borrower, they owns it. Locals only affects by inflation. However if they sell unrated bond or bond which belongs to companies that they want to to keep them barely alive or unsustainable, earning good commission from their VERY OWN deposit customers, then is a very different issue.

[CityFarmer]

Oil and Gas hit us badly. The low interest rate actually make it worst because it allow this inefficient industry to be prolonged instead of being restructured. What makes it even worst is the locals banks tapped retailers money cheaply to finance them. Maybe this Game needs to end.

That's why we locals are not very smart and support local banks especially our national bank by putting a lot of our deposits with them. Dbs has the most cash parked, the lowest interest bearing assets; but thanks to our locals support has the highest net interest margin.

In a way, it is our ownself to blame for the crisis. If there is less deposits for dbs to handle, they will be more prudent in their loan selection.

[Account holder with less than 5000 with dbs]

High saving rate, is a norm in Asia. Singapore is not the highest in Asia, based on the article below. It is prudent practice, isn't it?

http://www.cnbc.com/2015/10/25/china-sav...chart.html

[CY09]

Instead of putting a large proportion of savings in fd and deposits, can't we locals think of putting this savings in etf or bonds that we do our research on? If we do so, less money will be parked with banks. With less customer deposits, banks will have to be prudent in issuing out loans
This will mean loans are granted efficiently

[Clement]

Instead of putting a large proportion of savings in fd and deposits, can't we locals think of putting this savings in etf or bonds that we do our research on? If we do so, less money will be parked with banks. With less customer deposits, banks will have to be prudent in issuing out loans
This will mean loans are granted efficiently

I disagree with the bank bashing going on in this thread. 

Banks provide financial intermediation services, channeling funds from savers to borrowers. Are they sufficiently prudent in their credit standards? Most bank loans are secured and contain restrictive covenants. As for efficiency, from the borrower's perspective, I think they are doing a rather efficient job at it. As for savers, I don't think most people have the necessary time, skill or inclination to perform investment research. Bank deposits provide liquidity and principal protection, not present in ETFs and bonds.

Besides, didn't the Rickmers, Swiber etc bondholders invest their savings directly in bonds?

[weijian]

Oil and Gas hit us badly. The low interest rate actually make it worst because it allow this inefficient industry to be prolonged instead of being restructured. What makes it even worst is the locals banks tapped retailers money cheaply to finance them. Maybe this Game needs to end.

A smile on my face when I read this. I wonder whether the same "inefficient industry" tag would be bestowed to the OnG industry when oil prices were running at 80-100usd/barrel?

I thought you might NOT be someone from OnG to speak like this. So, I went to your blog to check out the "About Me" section. I didn't find it but I happen to read your "Tray Collection Robot" post and was surprised with this comment "I am more empathy that many of this old folks need to work or spending few hours of their time a day trying to earn some pocket money. This is especially so for those who do not have enough saving. There is limited job alternatives for them." If you can practice empathy on old folks whom do not have enough savings, maybe it is good to be consistent and also take note of the many thousands of Singaporeans whom will prefer a prolong of the crisis by a helping hand from somewhere and maybe, just maybe might make it across the finishing line. (this crisis will resolves itself once oil price increases sufficiently. There is no "inefficient industry" per say)

[weijian]

Instead of putting a large proportion of savings in fd and deposits, can't we locals think of putting this savings in etf or bonds that we do our research on? If we do so, less money will be parked with banks. With less customer deposits, banks will have to be prudent in issuing out loans
This will mean loans are granted efficiently

I disagree with the bank bashing going on in this thread. 

Banks provide financial intermediation services, channeling funds from savers to borrowers. Are they sufficiently prudent in their credit standards? Most bank loans are secured and contain restrictive covenants. As for efficiency, from the borrower's perspective, I think they are doing a rather efficient job at it. As for savers, I don't think most people have the necessary time, skill or inclination to perform investment research. Bank deposits provide liquidity and principal protection, not present in ETFs and bonds.

Besides, didn't the Rickmers, Swiber etc bondholders invest their savings directly in bonds?

Hi Clement,
It's funny some folks think their own unique experience is holistic enough to be implemented nation-wide
Some haven't been through enough crises to see how stock market crashes (AFC97...at least 50% drop in your ETF, anyone?) or banks will going belly up. While most banks have the minimum deposit insurance, with Temasek already having a record of "bailing out" DBS once (with POSB purchase), there is still a mental difference between putting money in DBS vs other banks. Those people with money, have money for a reason. They survived with their money. What we see, ARE the survivors.

With less customer deposits, banks will have to be prudent in issuing out loans --> This is akin to saying that someone with a investment portfolio of 100k will be more prudent in investing, compared to someone with a million. We all know this can't be true! It is the portfolio manager that matters! (in the case of banks, it is the risk appetite/greed of Mgt that matters)

[BlueKelah]

Instead of putting a large proportion of savings in fd and deposits, can't we locals think of putting this savings in etf or bonds that we do our research on? If we do so, less money will be parked with banks. With less customer deposits, banks will have to be prudent in issuing out loans
This will mean loans are granted efficiently

I disagree with the bank bashing going on in this thread. 

Banks provide financial intermediation services, channeling funds from savers to borrowers. Are they sufficiently prudent in their credit standards? Most bank loans are secured and contain restrictive covenants. As for efficiency, from the borrower's perspective, I think they are doing a rather efficient job at it. As for savers, I don't think most people have the necessary time, skill or inclination to perform investment research. Bank deposits provide liquidity and principal protection, not present in ETFs and bonds.

Besides, didn't the Rickmers, Swiber etc bondholders invest their savings directly in bonds?

Hi Clement,
It's funny some folks think their own unique experience is holistic enough to be implemented nation-wide
Some haven't been through enough crises to see how stock market crashes (AFC97...at least 50% drop in your ETF, anyone?) or banks will going belly up. While most banks have the minimum deposit insurance, with Temasek already having a record of "bailing out" DBS once (with POSB purchase), there is still a mental difference between putting money in DBS vs other banks. Those people with money, have money for a reason. They survived with their money. What we see, ARE the survivors.

With less customer deposits, banks will have to be prudent in issuing out loans --> This is akin to saying that someone with a investment portfolio of 100k will be more prudent in investing, compared to someone with a million. We all know this can't be true! It is the portfolio manager that matters! (in the case of banks, it is the risk appetite/greed of Mgt that matters)

IMHO SG as a financial hub in asean is like the "SWISS BANK" of this region. So much of the savings which banks have may belong to overseas high net worth individuals or corporations. Though I have no concrete figures but if we take it that most of wealth is owned by the top 10%-20% of population, we can  probably conclude those HNWI have a lot of cash in savings accounts as well. In addition a lot of liquidity from central banks all over the world will also flood into singapore via these people account. E.g. that facebook co-founder guy worth billions moved to Singapore rite? I think his savings account alone more than a few thousand of us added together LOL...

So even if we vote with our $$ and put our savings elsewhere, most of the bulk of savings could still be available from these rich people parking their money in SGD savings. Hence not much effect on the total amount of savings available to the bank if only small fry like us move our savings.

I reckon more important is the banks get properly regulated with hard and fast rules in terms of underwriting their loans/bonds and these loans get stress tested for crisis or low price condition.