Bank Competition in Southeast Asia

A competition has just set on fire. To expand the scale, DBS Group Holdings LTD., CIMB Group Holdings Bhd. and other banks in Southeast Asia start on merger on a large scale.

Unlike international banks, the regional banks are less affected by the economic crisis. In recent weeks, these banks have made deals on merger over 8 billion US dollars. DBS will purchase the PT Bank Danamon, the fifth largest bank in Indonesia, for about 7.3 billion US dollars. CIMB also purchased the Philippines Bank of Commerce for 2.9 billion dollars.

DBS Group Holdings Ltd.

(Source: businessweek.com)

Before these mergers, there happened a series of purchases within Asia. They aim at the growing amount of consumers and enterprises of the 10 countries in the Association of Southeast Asian Nations. These countries have a large amount of populations and of course, a large amount of opportunities.

PT Bank Danamon will be purchased by DBS.

(Source: businessweek.com)

The mergers will lead to great changes within the Southeast Asia. First, these banks can strengthen themselves and therefore they will be able to compete with those existing large international banks, such as Citi Bank, JP Morgan Chase Bank, etc. Second, the enhancement can also improve the current economic situation after the economic crisis. However, this can also cause some problems. For instance, overheated merges can lead to the appearance of monopoly, causing a lot of problems in the Southeast Asia economics.

Before the purchase of the Philippines Bank of Commerce, the CEO of CIMB, Nazir Razak, declared that only a few enterprises were prepared for the development of unified economic zone because most of them still doubted about the formation of such kind of zone.

The Southeast Asia is developing at an alarming speed.

(Source: apcss.org)

After the Asian debt crisis in the 1990s, the market in Southeast Asia has been ignored for a long tome. However, as can be seen from the competition in recent weeks, more industries have focused on the unification of Southeast Asia and considered it as a great opportunity. I think the competition will still promote the unification of the area, including Indonesia and Thailand, as there are too many small banks existed.