Deputy prime minister Lee Hsien Loong said in parliament last week the Monetary Authority of Singapore (MAS) was working out specific liberalisation measures in the deregulation process.

Lee said that while the MAS, which he heads, would keep its original five-year timeframe to open up the sector completely to foreign competition, it "will take bolder steps in earlier years".

Analysts said Lee's remarks, coupled with Prime Minister Goh Chok Tong's comment last week at an Overseas Union Bank Ltd (OUB) dinner that size does matter when one is "up against bigger sumo wrestlers", indicate Singapore is not happy with the pace of restructuring among local banks.

"They are probably fed up with the pace of mergers among the banks. They all either sayno or they are not interested," a banking analyst with a listed Singapore brokerage said.

In the past year there have been two bank mergers, but both involved banks in which the government was a major shareholder. These were the DBS Bank merger with POS Bank and the much smaller Keppel Bank with Tat Lee Bank.The other big banks, which have stayed stubbornly independent, are family controlled. OCBC Bank is in the hands of the Lee family, United Overseas Bank belongs to the Wees and OUB is still controlled by founder Lien Ying Chow.

Analysts say OUB, the smallest of the Big Four, is a prime candidate for a merger as founder Lien, 92, owns about 17 per cent of the bank and has no heir apparent.

But only this week OUB president Peter Seah said in an interview with a local newspaper that "the jury is still out on the absolute necessity to merge".

Lien will never merge with any of the other local banks as he clearly does not need the money. But more importantly, his legacy for OUB will disappear if itmerges with OCBC or UOB," a leading Singapore stock broker said.Analysts said the same thinking probably applies to the other family controlled banks, which would explain the lack of a sense of urgency among the three to merge either with one another or with a foreign party."There is resistance from management. With a foreign partner, existing management needs to go," said Seah Hiang Hong, analyst with Kim Eng Securities.

Analysts said mergers would help Singapore banks, already among the biggest in the region, to compete not only domestically but abroad when the sector is fully liberalised.

"This whole liberalisation exercise is not to amuse the foreigners but to make the Singapore banks strong. The government is opening up the domestic side so that the local banks will look elsewhere for growth," said Micheal Sia, analyst with SG Securities.

Singapore banks are well capitalised to expand in the region but, with the exception of DBS Bank which aquired a bank in Thailand and in Hong Kong last year, therest seem content to focus on domestic business.

OCBC Bank's new chief Alex Au and OUB's Seah recently unveiled medium term strategies for their respective banks which focused squarely on domestic retail banking.

"It seems a bit disappointing. But in the longer term, the growth is not going to come from Singapore which is already so well banked. It does not make sense to merge if they only need to compete in Singapore. But if you go overseas to look for growth, size does matter," an analyst with a European brokerage said.