BNP Paribas, France's largest listed bank, is close to buying a substantial stake in Overseas Union Bank (OUB), the smallest of Singapore's so-called Big Four banks.
The two have been in talks since November and market talk suggests an agreement is close to completion.
A spokesman for OUB said yesterday: 'Discussions are still ongoing.
Officials from BNP Paribas, which holds a retail banking licence in Singapore, declined to comment.
The latest round of speculation, which has surfaced several times in the past two months, comes just weeks after senior officials signalled that banks may need to consider alliances with foreign partners.
Lee Hsien Loong, deputy prime minister and head of the Monetary Authority of Singapore, said recently that the top four local banks may need to advance their commercial clout through alliances or mergers with foreign parties.