Options shifting in Asian banking consolidation

Whether, and how, and which Asian regional banks are worth combining and on what terms is a question coming into even sharper relief now that Singapore's corporatist state gets a big say in the future of one of the leviathans of European banking.

UBS earns eight per cent of its profit from the Asia Pacific region, up from six per cent two years ago. Most of this profit will derive from asset management and investment banking.

Through the Temasek investment vehicle Singapore owns a 15 per cent stake in Standard Chartered as well as a two per cent stake in Barclays.

Supposedly Temasek, Singapore's government and some of its banks aim to merge Standard Chartered with one or more of Singapore's banks.

The Financial Times last month reported that Industrial and Commercial Bank of China, Bank of China and China Construction Bank made an offer to buy Temasek's stake in SBC, which is a prominent business bank in Asia, the middle east and Africa.

A parochial angle is that the landscape is shifting for any Australian bank - such as ANZ - which is refreshing its options in Asia and, among other things, working out how much capital to raise in order to pursue its vision.

Thanks to the sub-prime crisis bank strategies and bank ownership in Asia seem destined to change, leaving banks with their eye on Asia with a shortened time frame for decision making.