Addressing the country's financial elite, Lee, who is also the chairman of the city-state's central bank, announced that foreign lenders with qualifying full bank licenses will be allowed to operate in 25 locations locally, up from the current 15, with effect from January 1.

He said these foreign banks will be allowed, with immediate effect, to negotiate with the local banks to let their credit card holders obtain cash advances through the automated teller machines of local lenders.

Six foreign banks have so far obtained qualifying full bank licenses which allows them to compete with local banks in offering consumer banking services after Singapore took steps to open up the industry to more competition five years ago.

These foreign banks are ABN AMRO, Banque Nationale de Paris, Citibank, Standard Chartered Bank, Hong Kong and Shanghai Bank and Malayan Banking Bhd.

The central bank is also prepared to grant a limited number of new wholesale bank licences to qualified applicants, Lee said.

Lee was speaking to the Association of Banks in Singapore which organised a dinner in his honour and bid him farewell as he prepares to leave his finance ministry and central bank portfolios to succeed Goh.

The son of Singapore's founding father and first prime minister Lee Kuan Yew, Lee Hsien Loong was endorsed last month by the ruling People's Action Party as the next prime minister. He would take office on a date to be announced by Goh in July.

"It's a strange feeling listening to remarks like that. It's like reading your obituary in the newspaper," the younger Lee said of Tai's tribute.

In his speech, he thanked the financial industry for their support, but said the reforms must be continued.

"Singapore now has one of the most liberal banking environments in Asia. However, over time, as the industry changes, we must be ready to liberalise further," he said.

"We must never become complacent and satisfied with the status quo, or else we will soon be overtaken and left behind."

Lee, 52, was named chairman of the central bank, the Monetary of Singapore, in 1998 and became finance minister in 2001.

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