Bank Negara should not play God to pick the "winners" and "losers",  withdraw its directive on forced merger of banks  and  emulate Japan to give support and even incentives for bank consolidation and mergers

Media Conference Statement
by Lim Kit Siang 

(Kota Kinabalu, Saturday): It was announced in Tokyo yesterday that three of Japanís biggest banks would form a broad alliance to give birth to the  first trillion-dollar global mega-bank merger, involving Dai-Ichi Kangyo Bank, Fuji Bank and IBJ.

The three, which would form a joint holding company by July next year and integrate their business operations by March 2002, would have combined assets totalling US1.3 trillion (RM4.94 trillion) surpassing the current world banking leader Deutsche Bank AG and nearly twice as large as Citigroup.

Bank Negara should learn from the example of the Japanís Financial Revitalisation Commission,  Japanís financial regulator  which had been pushing hard for the consolidation of Japanís financial institutions -  not to play God to pick the "winners" and "losers" but to give support and even incentives for bank consolidation and mergers.

While Malaysians  support the principle of bank consolidation and mergers to prepare the financial sector to face the challenges of globalisation, Bank Negara should not be forcing banks to merge according to its own diktat - especially when there is a murky backdrop of the actual agenda for the Bank Negara suddenly wanting to rush through the forced bank mergers when only a few weeks earlier it had expressed satisfaction with the progress of the bank merger issue.

Bank Negara should withdraw its directive to force the merger of  the  21 commercial banks, 25 finance companies and 12 merchant banks into six banking groups, with preliminary merger agreements signed by all financial groups by the end of September.

Instead, the banks, finance companies and merchant banks should be given three months to come out with their own merger plans, allowing the banks to pick the partners they wish to merge with taking into consideration the different  cultures and systems in the various financial institutions.


*Lim Kit Siang - Malaysian Parliamentary Opposition Leader, Democratic Action Party Secretary-General & Member of Parliament for Tanjong