2. Horizontal integration takes place when firms producing the same product, or firms in the same production stage, combine together. Horizontal integration enables a firm to turn a competitor to partner. In this project, we are going to investigate the advantages of the integration. Case study in Hong Kong has been included.

3. Development Bank of Singapore (Hong Kong) Limited The combination of : Dao Heng Bank Limited, DBS Kwong On Bank Limited and Overseas Trust Bank, Limited. +=

4. We had carried out a interview with Miss Alison K.M. Lau, Vice President of DBS Bank (Hong Kong) Limited Time: 27 th August, 2004 Venue: 99 Queen’s Road Central, Central, Hong Kong

5. In the interview, we asked several questions such as: -The motives of integrating with Dao Heng Bank -The financial situation before and after the integration -Benefits gain from the integration -economies of scale DBS bank benefit from…etc *Altogether 5 questions were asked. The findings and the three-year financial situation (I.e. Balance sheet, Profit and loss account and cash flow for the year ended 2000-2003)of Dao Heng Bank and DBS Bank will be included in the project.

6. 1. What are the motuves for the integration with Dao Heng Bank? a)Dao Heng Bank had many branches in HK.(over100) b)DBS bank aims at diversifying markets within Asia. Since HK is an established financial centre, so the organization took Dao Heng bank as a stepping stone to open the Chinese market. c)It is easy and convenient to establish a bank in HK. d)Dao Heng bank has a long history in HK. HK people have impression with it. e)Dao Heng Bank’s scalre and customers in china was not too large, so it was cheaper to take over Dao Heng Bank. f)Through integration, it helps to increase the ranking of DBS bank in HK.

7. 2.When did DBS Bank integrate with Dao Heng Bank, how long did it take? - DBS got the approval of HKMA in April 2001 -the integration was completed in 21/7/2001 3. How did the integration affect DBS Bank’s ranking and market in HK? -DBS bank is the 5 th largest group in HK measured by assets. -With dominant positions in consumer banking, treasury and markets, assets management, securities brokerage,equity and debt fund raising.

8. 4. How did the integration help the development of DBS Bank? -to pursue a better image from a local bank to a regional bank. -developed markets in HK as well as the Asia Pacific region -Increase in ranking of the bank -Help DBS bank to save money (course saving) -Attract more professionals to work in the bank. The capacity became larger, although these things are intangible.

9. After the interview and observing the financial statement, we can conclude the motive of the integration is that they can enjoy: (I) Managerial economies: When the scale is larger, the scope of specialization is wider. The larger can make more economical use of management specialists. This improves efficiency and reduces average cost. (II)Spreading risk by market diversification and source diversification (III)Research and development (IV)Making more efficient use of resources.