Merger maestro Wee Cho Yaw cautious on acquisitions

Merger maestro Wee Cho Yaw cautious on acquisitions

UOB's chairman emeritus Wee Cho Yaw - who orchestrated multiple acquisitions when he helmed the bank - has sounded a note of caution on mergers with other banks in today's environment.

"With acquisitions today, it's very difficult to get growth," he said on Thursday at the shareholders' meeting, noting risks in taking over not just the assets, but also the liabilities, of a target company. "We have to be very careful."

Mr Wee spoke up after a shareholder in the 700-strong crowd asked why UOB was not actively pursuing acquisitions, with OCBC recently snapping up Barclays' wealth management business in Singapore and Hong Kong, just after completing its purchase of Wing Hang Bank. DBS earlier bought SocGen's private banking business in Asia.

The same shareholder lamented that UOB has become the smallest of the Singapore trio of banks today.

UOB had bulked up through a series of acquisitions under Mr Wee's leadership. These included the S$10 billion takeover of Overseas Union Bank in 2001.

Mr Wee said without acquisitions, short-term growth would be limited.

Following up on the same point, UOB's chief executive officer Wee Ee Cheong said that with today's capital treatment, it's not easy to acquire banks.

"Size is not everything. You have many big banks - they are big, but they can fail," he told shareholders.

The bank is growing organically, and has "planted seeds" to grow in South-east Asia. The bank has the largest ASEAN network of the three Singapore lenders. Growth has been in line with the industry, he added.

"We are all shareholders together . . . some shareholders actually prefer us to be conservative in this volatile world. They want us to stay disciplined," the CEO said.

He added that volatility is expected to continue, amid lingering concern over commodity prices and China, with regional growth expected to be weighed down. But he sees the rebalancing of China's economy as positive in the long run, with increasing connectivity in Asia a boon over time. The bank is confident about managing asset quality and credit costs, Mr Wee added. "We see a slowdown, not a crisis."

All resolutions were passed.

This article was first published on April 22, 2016.
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