Banks and banking

Chinese banking in Singapore and the Federation of Malaya developed from the early twentieth century as a response to the financial needs of the Chinese commercial community, which had long operated without access to the European and American banks that dominated the foreign exchange market. The earliest institution, the Kwong Yik Banking Company, was incorporated in Singapore in 1903, predating the Bank of Communications (1907) and the Bank of China (1905) in China itself [1, p. 112]. By 1952, thirteen Chinese banks had been registered in Singapore and two in the Federation, though several had failed or amalgamated in the intervening decades [1, p. 112]. The history of these institutions is inseparable from the broader economic conditions of the region: the unification of the Straits currency in 1898, the post-war rubber boom, the global slump of the 1930s, and the disruptions of the Japanese Occupation all shaped their fortunes [1, pp. 112–121].

Origins and Early Institutions

The Kwong Yik Banking Company, established in 1903, was promoted by Wong Ah Fook, a Toishan-born carpenter turned building contractor and gambier planter who had previously issued his own notes to pay the wages of his labour force [1, p. 112]. The bank’s name, meaning “Cantonese Interests” or “Benefitting Cantonese people,” indicated a predominantly Cantonese shareholder base [1, p. 112]. Its failure in 1913, caused by loans granted to its own directors, led the Supreme Court to appoint liquidators and prompted the Government to amend the bank ordinance with strict restrictions on advances to directors and officers [1, p. 113]. The Sze Hai Tong Banking and Insurance Company, founded in 1907 by members of the Teochew community, followed a markedly different course: characterised by what Tan Ee-Leong described as “Unity and Conservatism,” it weathered the 1914 war panic through strong cash reserves and the intervention of its largest individual shareholder, Low Peng Yam, who deposited $500,000 at the height of the crisis [1, pp. 113–114]. Yet this same conservatism restricted its growth; in forty-five years it established only two branch offices, at Bangkok and Hongkong [1, p. 114].

Expansion, Exchange Operations, and Amalgamation

The Ho Hong Bank, opened in 1917 with branches in Malacca, Muar, and Batu Pahat, marked a new phase in Chinese banking overseas [1, p. 117]. Its two distinctive features were outward expansion and the conduct of foreign exchange business by arbitrage, a domain previously monopolised by the European and American banks [1, pp. 118–119]. Under the direction of its chairman Lim Peng Siang and general manager Seow Poh Leng, the bank opened offices in Penang, Palembang, Seremban, Hongkong, and Batavia, and built a network of correspondents throughout the world [1, p. 118]. Its issued capital reached $4,000,000 fully paid up by 1920, and its reserves exceeded $2,000,000 [1, p. 118]. The Oversea-Chinese Bank, established in 1919 with a paid-up capital of $5,250,000, pursued a similar policy of branch expansion and exchange operations [1, p. 122]. The combined shock of the Japanese invasion of Manchuria in September 1931 and Britain’s abandonment of the gold standard three days later cost the Ho Hong Bank over $2,000,000 in exchange losses [1, p. 121]. Faced with the continuing slump, the three principal banks—the Chinese Commercial Bank, the Ho Hong Bank, and the Oversea-Chinese Bank—signed an agreement of sale on 14 December 1932, creating the Oversea-Chinese Banking Corporation with a total paid-up capital of $10,000,000 divided into $40 fully paid shares and an eighteen-director board [1, p. 124].

The Federation and Post-War Developments

On the mainland, the Kwong Yik (Selangor) Banking Corporation, incorporated in Kuala Lumpur on 15 July 1913, was the first and only surviving Chinese bank registered in the Federation [1, p. 137]. It pursued a sound, conservative policy and declared dividends of 40 per cent in 1950 and 1951, falling to 25 per cent in 1952 [1, p. 139]. The Bank of Malaya, established at Ipoh in 1920 with $1,000,000 paid-up capital, succumbed to the 1930s slump and went into voluntary liquidation; its building was subsequently sold to the Ipoh branch of the Oversea-Chinese Banking Corporation [1, p. 139]. In the post-war period, new institutions emerged: the Overseas Union Bank, incorporated in 1947 and opened in 1949, grew out of a wartime refugee bank established in Chungking [1, pp. 133–134], while the Chung Khiaw Bank, the latest addition, commenced business in February 1950 with offices in Singapore and Ipoh [1, p. 136].

Research and Documentation

The principal source for this subject is Tan Ee-Leong’s 1953 survey, published in the JMBRAS [1]. Tan, a former senior officer of the Ho Hong Bank and the Oversea-Chinese Banking Corporation who had served in its China and Indonesia operations, wrote the article as an act of institutional salvage: he judged that the destruction of bank archives during the Japanese Occupation had placed the history of these institutions in danger of being irrecoverably lost [1, p. 111]. The article is therefore an insider’s account, drawing on personal recollection, company registration returns, and balance sheets rather than on a dedicated archival collection. Its scope is limited to the thirteen Singapore banks and two Federation banks incorporated between 1903 and 1952; the thirteenth Singapore bank, the Kwong Lee Banking Company, an unlimited company, is noted but not documented for want of information [1, p. 112]. No subsequent article in the Society’s literature has been identified in the present records that extends or revises this account.

MBRAS Sources

• Tan Ee-Leong (1953). The Chinese banks incorporated in Singapore and the Federation of Malaya. JMBRAS 26: 113–139

References

1. Tan Ee-Leong (1953). The Chinese banks incorporated in Singapore and the Federation of Malaya JMBRAS 26(1): 113–139.