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The history of banking in Singapore began with the arrival of financial institutions, such as agency houses and Chettiar moneylenders, to support European investment into the Malayan commodities trade such as rubber plantations and tin mining. The diversification of the Malayan economy and growing local business interests motivated the founding of the first local banks by Chinese businessmen. As part of it's economic planning and development after the Independence of Singapore, the Singapore government established both the Development Bank of Singapore in 1968 and the Monetary Authority of Singapore in 1971, which facilitated government regulation and direction over the Singapore economy. By the 21st-century, local banks such as OCBC Bank, DBS Bank and United Overseas Bank grew to compete with foreign banks in both the local and regional financial markets, contributing to Singapore's position as a regional financial hub.
Background of Finance in the Late 19th-Century[edit]
Financial Institutions in the Late 19th-Century[edit]
European Institutions[edit]
Chettiar Moneylending Firms[edit]
Chinese Financial Institutions[edit]
Economic Transition of British Malaya[edit]
Transition towards Capital-Intensive Investment[edit]
In the late 19th-Century, local Malayan business interests were predominated Chinese businessmen who competed with larger European corporations for a portion of the local commodity export economy.[1] Initially, Chinese businesses specialised in labour-intensive investments to compete with European businesses. However, technological innovations in industry, agriculture, and infrastructure transitioned the local economy towards capital-intensive investments, which favoured European businesses due to their access to favourable credit from well-funded western banks. Meanwhile, capital-intensive investments increased local demand for financial services such as insurance and credit.[2]
Abolition of Revenue Farming[edit]
In the 19th-Century, the British colonial government had relied on the revenue farming system (government-sanctioned monopolies on sales or licensing revenue, especially opium) to generate tax revenue. These revenue farms were mostly operated by Chinese businessmen, who used the revenue farms to accumulate capital for investment. [3] However, by the end of the 19th-Century, the revenue farming system was gradually phased out, motivating Chinese businessmen to diversify into financial services and other industries.[4]
Barriers to Financial Capital[edit]
For Chinese businessmen looking for capital to finance business expansion, financing business expansion through debt was expensive due to unfavourable conditions set by European banks and Chettiars, who dominated the Malayan capital market. European banks were unwilling to loan money to Chinese businessmen, or charged high interests for their loans, and few Chinese businessmen had accounts in European banks.[5] Similarly, loans from Chettiar firms came with 24-36% interest rates attached, [6] which made Chettiar loans impractical for financing business investments. Thus, increasing demands for financial services and financial capital among the Chinese business community thus motivated the establishment of independent Chinese banks.
Early Developments in Local Banking (1903-1929)[edit]
Establishment of Local Banks[edit]
With no Malay or Indian banks established before the war, local banking before World War II was dominated by Chinese banks.
Kwong Yik Bank[edit]
| Initial Promoters and Officers of the Kwong Yik Bank [7] [8] | ||
|---|---|---|
| Name | Role | Associated Businesses |
| Lam Wei Fong | Managing Director | Pawnbroker |
| Wong Gai Seung | Deputy Managing Director | Comprador |
| Boey Lian Chin | Deputy Managing Director | Pawnbroker |
| Wong Mun Po | Manager | Pawnbroker |
| Wong Ming | Manager | Merchant |
| Wong Ah Fook | Director | Property Owner |
| Choo Su Meng | Director | Merchant |
| Hui Kwik Sun | Director | Merchant |
| Yow Ngan Pan | Director | Merchant |
| Wong Kwong Yam | Director | Pawnbroker |
| Mui Bak Fook | Director | Pawnbroker |
Sze Hai Tong Banking & Insurance Co., Ltd.[edit]
The Three Hokkien Banks[edit]
Chinese Commercial Bank The Ho Hong Bank Overseas-Chinese Bank
The operations of the three Hokkien banks saw three key features in Chinese finance in Singapore – the introduction of modern financial services, the cooperation of English- and Chinese-educated expertise, and the overlap of individuals between positions across the three banks.
| Individuals and Positions in Associated Hokkien Banks[9] | |||
|---|---|---|---|
| Name | Chinese Commercial Bank (est. 1912) | Ho Hong Bank (est. 1917) | Overseas Chinese Bank (est. 1919) |
| Lee Choon Guan | Co-founder, Chairman | Director | |
| Lim Boon Keng | Co-founder, Vice-Chairman | Co-founder | Promoter, Director |
| Lim Peng Siang | Co-founder, Managing Director | Co-founder | |
| Seow Poh Leng | Manager | Co-founder, General Manager | |
| Yin Suat Chuan | Director | Co-Founder | |
| S. Q. Wong (Son of Wong Ah Fook) | Director | Director | Director |
| Tan Ean Kiam (Father of Tan Tock Seng) | Director | Managing Director | |
Structure and Management of Chinese banks[edit]
Bang Affiliation
| Pre-war Banks and Associated Dialect Groups | |||
|---|---|---|---|
| Bank | Years Active | Dialect Group | |
| Kwong Yik Bank (Singapore) | 1903-1913 | Cantonese | |
| Sze Hai Tong Banking & Insurance Co., Ltd. | 1907-1998 | Teochew | |
| Chinese Commercial Bank, Ltd. | 1912-1932 | Hokkien | |
| The Ho Hong Bank, Ltd. | 1917-1932 | Hokkien | |
| Overseas Chinese Bank, Ltd. | 1919-1932 | Hokkien | |
| Lee Wah Bank, Ltd. | 1920-1994 | Cantonese | |
active managerial role of early directors
industries associated with the banks’ shareholders.
| Individuals and Associated Banks, Dialect Groups, and Industries[10] | |||||
|---|---|---|---|---|---|
| Name | Years | Dialect Group | Education | Associated Bank(s) | Associated Industries |
| Wong Ah Fook | 1837-1918 | Cantonese | Nil | Kwong Yik Bank | Construction, Gambier |
| Tan Teck Joon | 1867-1929 | Teochew | Nil | Sze Hai Tong Bank | Textiles, Rubber |
| Lee Choon Guan | 1868-1924 | Hokkien | Private Education | Chinese Commercial Bank, Ho Hong Bank | Commerce, Real Estate, Finance |
| Lim Boon Keng | 1869-1957 | Hokkien | Raffles Institution, University of Edinburgh | Chinese Commercial Bank, Ho Hong Bank, Overseas Chinese Bank | Rubber, Insurance |
| Leow Chia Heng | 1870-1931 | Teochew | Nil | Sze Hai Tong Bank, Chinese Commercial Bank | Pepper, Gambier, Rubber, Textiles |
| Lim Peng Siang | 1872-1944 | Hokkien | St. Joseph Institution | Chinese Commercial Bank, Ho Hong Bank | Shipping, Remittance, Manufacturing |
| Eu Tong Sen | 1877-1941 | Cantonese | Private Education (Chinese, some English) | Lee Wah Bank | Medicine Remittance, Tin, Real Estate |
| Lim Nee Soon | 1879-1936 | Teochew | Private Education (Chinese, some English) | Chinese Commercial Bank, Overseas Chinese Bank | Construction, Rubber, Pineapple and Canning |
| Lee Wee Nam | 1881-1964 | Teochew | Traditional Chinese Education | Sze Hai Tong Bank | Banking, Remittance |
| Aw Boon Haw | 1882-1954 | Hakka | Chinese | Ho Hong Bank, Sze Hai Tong Bank | Newspaper, Medicine |
| S. Q. Wong | 1888-1980 | Cantonese | Raffles Institution, Jesus College, Cambridge | Chinese Commercial Bank, Ho Hong Bank, Overseas Chinese Bank, Overseas Chinese Banking Corporation | Law, Banking, Insurance |
| Lee Kong Chian | 1893-1967 | Hokkien | Chinese | Chinese Commercial Bank, OCBC | Banking, Rubber, Pineapple and Canning |
Depression and Banking Reforms (1930-1941)[edit]
Consolidation of Hokkien Banks into OCBC[edit]
Decline of Chettiar Moneylending Firms[edit]
Liquidity and Financial Risk[edit]
Post-War Colonial Banking (1945-1965)[edit]
Banking in 20th-Century Singapore (1965-2000)[edit]
Government Economic Planning[edit]
Establishment of the Development Bank of Singapore[edit]
Establishment of the Monetary Authority of Singapore[edit]
Increasing Financial Competition and Mergers[edit]
References[edit]
- ^ Huff, The Economic Growth of Singapore, 10.
- ^ Trocki, Opium and Empire, 190
- ^ Trocki, Opium and Empire, 214.
- ^ Dables and van den Muijzenberg, “Capital and Knowledge,” 152.
- ^ Tai, Chinese Capitalism, 346.
- ^ Huff, The Economic Growth of Singapore, 230
- ^ Lim Pui Huen, Patricia (2002). Wong Ah Fook: Immigrant, Builder and Entrepreneur. Singapore: Times Editions. p. 112.
- ^ "Lat Pau, 16 December 1903". NUS Historical Newspaper Collection. National University of Singapore. Retrieved 10 February 2023.
- ^ Tan Ee Leong, "The Chinese Banks incorporated in Singapore & the Federation of Malaya,” Journal of the Malayan Branch of the Royal Asiatic Society, Vol. 26, No. 1 (161) (July, 1953): 117-27.
- ^ C. F. Yong, “A Preliminary Study of Chinese Leadership in Singapore, 1900-1941,” Journal of Southeast Asian History, Vol. 9, No. 2 (Sep., 1968): 264, 274-75.
