Kwong Yik Bank (Singapore)

SOURCE: HISTORY INSIGHTS - MALAYSIA

The Kwong Yik Banking Corporation Limited, or simply the Kwong Yik Bank of Singapore, was the first local bank established in Singapore and British Malaya. The Kwong Yik Bank was founded in 1903 by Cantonese businessmen led by Wong Ah Fook, to provide personal banking services and arrange mortgages and loans to its predominantly Chinese clientele.

Kwong Yik Bank was founded on 16 December 1903 by prominent Malayan Cantonese businessmen, with a paid-up capital of $850,000.

The Chinese characters of Kwong Yik (廣益) referred to both the "benefit of Cantonese people", referring to its Cantonese background, and "extensive profit", being an auspicious business name.

Kwong Yik Bank was the first local bank established in Singapore and British Malaya and provided personal banking services and arrange mortgages and loans to its predominantly Chinese clientele. Its staff provided banking services to customers in Chinese and accepted checks written in Chinese, improving accessibility of banking and helped popularise the use of current accounts within Chinese society.

On the 20th November 1913, the Kwong Yik Bank ceased operations due to a bank run caused by rumours of the bank being unable to fulfil withdrawals. The bank announced plans to hold an internal audit and restructure its operations, and reassured that it had sufficient assets to meet its obligations. The suspension of operations caused a panic and the Singapore Chinese Chamber of Commerce (SCCC), which represented the different dialect bangs and their commercial interests, became involved in mediating the crisis, who scheduled a meeting for Kwong Yik's leaders before the SCCC and the bank's creditors on 6 December.

However, at the meeting, the auditor revealed he had discovered severe financial malpractice. Not only had the bank's managers issued unsecured loans to their fellow directors and associates, the bank's accounts were also never properly audited or balanced. These revelations soured public opinion against the bank. In the meantime, the bank's leadership were appealing to businessmen from the Kwong Yik (Selangor) Bank, a namesake bank founded in Selangor by Cantonese businessmen a few months prior to the crisis.

However, the Kwong Yik Bank of Selangor did little to help its Singaporean counterpart regarding its liquidity crisis and distanced itself from its namesake. As the crisis worsened, the shareholders replaced Lam Wai Fong with Wong Ah Fook as managing director, who offered his fortune as security in settlement of the bank's debts.

Even so, the bank's leadership could not secure enough funds, and on 9 December, Kwong Yik's creditors and the representatives of the Chinese dialect bangs (including the Cantonese bangs) unanimously resolved to voluntarily liquidate the bank.

The rapid collapse of the Kwong Yik Bank shocked Chinese society, and the highly emotional affair caused much resentment towards the Cantonese within Chinese society.

As the bank's founder, director and largest shareholder, Wong Ah Fook badly damaged his reputation as a businessman and incurred much of the bank's debt, which he spent much of his remaining years clearing his portion of claims before his death in 1918.

Thus, subsequent Chinese banks would adopt more organised and regulated framework for their banking operations to avoid similar mismanagement.

As for the local Cantonese businessmen, they would soon reorganise their banking interests, founding the Lee Wah Bank in 1920.

Source and image credit: Wikipedia

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22/12/2024: 8.08 p.m