Temasek’s high return claims may be factual. This is because it has paid for state assets from the PAP government at lelong prices.
On such asset transferred to Temasek was Post Office Savings Bank (POSB). POSB became a statutory board in 1971. Public resources in the hundreds of millions or billions must have been used in its expansion over more than 2 decades before PAP decided that it was time for profits to go into Temasek’s pocket.
1976 – One million depositors, deposits crossed $1 billion mark.
1986 – Deposits crossed $10 billion mark.
1998 – Transferred to DBS at only $1.6 billion
According to MOF, DBS paid 1.37 times NTA for POSB, valuing the pow chiak bank at only $1.6 billion.
Considering “POSBank’s savings account base covers about 95% of all adult Singaporeans, as well as many students and children”, isn’t $1.6 billion a lelong price?
According to an earlier POSB annual report (see table below), total deposit had already hit $20 billion in 1993 and the number of savings accounts was higher than Singapore’s total population of 3.3 million.
Even aliens were opening savings accounts at POSB in 1993
As a stat board, POSB was generating surpluses every year. A few years earlier, its annual surpluses had even exceeded $200 million.**
A price tag of $1.6 billion meant DBS could have recoup the entire investment in probably 5 years due to POSB’s consistent expansion. POSB was as good as a giveaway.
With about $30 billion in deposits, POSB could not have been worth only $1.6 billion. If DBS were profitable every year, had $30 billion in deposits and an established network, would it price itself at $1.6 billion in a merger?
PAP was in such a rush to transfer ‘pow chiak’ POSB at below market value to Temasek and even broke the law when it did not inform the President. (Many have speculated that DBS was overexposed during the AFC. By taking over POSB, DBS would have immediate access to an additional $30 billion in deposits.)
Unreserved President Ong Teng Cheong:
The lelong sale of POSB – just one of many stat boards – has enabled Temasek to achieve impossibly-high returns.
(CAAS – worth tens of billion$ was transferred to Temasek at only $3.3 billion. (Leong Sze Hian) And weren’t the 3 power generation plants which Temasek sold for about $12 billion also transferred during another Great Singapore Sale? What about Singapore Airlines, Singapore Power, PSA, Singtel, etc?)
Without the transfer of state assets at ridiculously-low prices, Temasek could not have achieved double-digit, long-term returns.
It is precisely to conceal this fact that transparency will never see daylight at Temasek. Or Singaporeans would discover that its stratospheric returns are all BS. 😉
What do you think?
In 2000, the government tried to paint POSB as a failure in Parliament to justify merger with DBS at $1.6 billion. “Ministerial Statement on Bank Charges by DBS/POSBank”