Kwong Yik Bank

The Kwong Yik Banking Corporation Limited, or simply the Kwong Yik Bank of Singapore (Chinese: 新嘉坡廣益銀行; pinyin: Xīnjiāpō guǎngyì yínháng) 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.

In 1913, the Kwong Yik Bank failed after experiencing a bank run. Liquidators of the bank exposed irregularities in record-keeping and financial malpractices in the daily management of the bank. In response, the Government of the Straits Settlements initiated lawsuits against the bank's directors and tightened regulatory control on banks and companies to protect the interests of depositors.

Background

Chinese entry into finance

In the late 19th-Century, demand for banking services and credit to finance investments grew among the Chinese business community and society. In response to unfavourable lending conditions from western banks and Chettiar firms and increasing commercial competition with western businesses, Chinese businessmen sought to diversify into financial services, among other industries.

Currency reforms in the Straits Settlements, such as the introduction of the currency note issue in 1898, the introduction of the silver Straits Dollar pegged to the Gold Standard in 1903, and the Sterling Exchange Standard in 1906, also facilitated Chinese entry into financial services, benefiting from the improved monetary stability compared to the 19th-Century.

Existing Chinese financial institutions

Before the founding of the Kwong Yik Bank, the local Chinese in Malaya engaged in pawnbroking and remittance businesses. Pawnbrokers provided short-term credit secured against collateral, and was viewed as a better alternative to borrowing from Chettiar moneylenders.