Lee Hsien Loong, who also heads the Monetary Authority of Singapore (MAS), told an Association of Banks in Singapore (ABS) dinner that bank disclosure requirements were to be raised to international standards.
He said Singapore's Committee of Banking Disclosure would soon publish recommendations on changes to banks' disclosure and provisioning practices.
Mr Lee said: "The Committee has recommended that local banks stop the current practice of maintaining hidden reserves. It recommends they disclose the market value of their investments, which have largely been valued at book cost and hence contributed to their hidden reserves."
The deputy prime minister said the banking, securities and insurance markets would progressively be opened up to foreign competition over the next five years. "Competition is already lapping at our doorstep. It is better to embrace liberalisation at our own pace than face the prospect of one day being swept away by the floodwaters of competition."
He added that more competition would enhance Singapore's development as an international financial centre, and in turn should create more business for everyone.