| Market Development
Thai fund shuns local stocks as India seen as better buy The Malay Mail Online 27th May 2014
Thailand’s political turmoil is spurring the nation’s biggest state pension fund to look for better returns overseas. The Government Pension Fund has underweight holdings in local shares and doesn’t plan to boost positions until political stability returns and the economy shows signs of recovery, said Sombat Narawutthichai, who helps oversee about 670 billion baht (RM65.9 billion) as the fund’s secretary general. GPF will instead buy shares in India, Indonesia and the Philippines, which have stable politics and stronger economies, he said. While Thai gross domestic product contracts and the country grapples with its 12th military coup since 1932, markets in India and Indonesia are surging on speculation elections will install leaders capable of boosting growth. Foreign investors have pulled US$720 million (RM2.3 billion) from Thai stocks in the past five days as analysts from Goldman Sachs Group Inc to Credit Suisse Group AG reiterated bearish recommendations on the shares.
MSB plays vital role in financial services industry Borneo Post 22nd May 2014
The money services business (MSB) industry has contributed an important role in complementing banking institutions to provide financial services to the community. This particular business segment has provide financial services to segments of society in both developing and developed world that do not have access to basic banking facilities especially the unbanked and small business communities. Bank Negara Malaysia (BNM) deputy governor Datuk Muhammad Ibrahim said the increasing level of money services businesses has lend support to the tourism industry, particularly business travel and cross-border trade activities. “The MSB industry contribute to an important purpose in our communities. They provide financial services to segments of society in both the developing and developed world that do not have access to basic banking facilities and services. “Increasingly, MSB provides and support tourism, business travel and cross-border trade activities in a more globalised world economy.”
Thai Baht Drop Signals No Bear Market to Coup-Savvy Mobius Bloomberg 22nd May 2014
Within a minute of Thailand’s army announcing a coup, the baht fell 0.6 percent versus the dollar. Templeton Emerging Markets Group and Samsung Asean Equity Fund say any market weakness will be shortlived. “We view the current military coup as likely overall positive as it creates a more stable environment,” Mark Mobius, who oversees about $50 billion as the group’s executive chairman, said by e-mail. “The prognosis for Thailand is good given that direct foreign investors want stability in the country.” Overseas investors pulled $408 million from Thai stocks since martial law was declared early on May 20, according to exchange data, helping send the benchmark SET Index in Bangkok down 0.7 percent this month. The baht, the worst-performing currency in Asia in May, weakened 0.3 percent to 32.560 per dollar at 11:25 a.m. in New York.
Finance chiefs finalize ASEAN bloc launch Philippine Star 21st May 2014
Finance ministers from Southeast Asia gathered in Manila for the 10th Asean Finance Ministers’ Investors Seminar (AFMIS) to discuss current economic issues and put the finishing touches on the framework for regional integration that begins in 2015. The seminar, held at The Peninsula Manila and which gathered the brightest minds in banking and finance, also served as a curtain raiser for the World Economic Forum on East Asia – a business event that will be held for the first time in the country on May 21 to 23. Philippine Finance Secretary Cesar V. Purisima, who opened the morning session together with Myanmar Finance and Revenue Minister U Win Sheing, reiterated the benefits of ASEAN integration. While the region is composed of fast growing economies, he said ASEAN will even be bigger with integration. “Inter-ASEAN trade is growing rapidly. In the past three years, the growth of inter-ASEAN trade has outpaced the growth of world trade. That just shows the benefits of a more connected, more harmonized ASEAN, which, as a single country, would have the third largest population and a GDP of over $2 trillion,” Purisima said.
Foreign investors put trust in Vietnam’s market Vietnam Bridge 21st May 2014
The 18-day flow of money into Vietnam’s stock market suggests overseas money managers are unfazed amid concern that anti- China riots in the country will deter foreign investment and curb economic growth, read a story published by Bloomberg on May 19. It said foreign investors were net buyers on the Ho Chi Minh City stock exchange every day since April 18, the longest stretch of purchases since January. They added about 93 million USD to their holdings even as the benchmark VN Index slumped 8.8 percent through May 16. According to the article, Advance Emerging Capital, Samsung Asset Management and Jefferies Group Inc. said they’re still upbeat about Vietnam as inflation stays low, the Government removes bad debt from banks and the prospect of a Trans-Pacific Partnership trade deal bolsters the outlook for exporters.
Thailand martial law hits local currency and stocks BBC 20th May 2014
Thailand's currency the baht and Thai shares fell on Tuesday after the army imposed martial law in an attempt to restore stability. The move follows months of political protests. The country's benchmark stock index the SET fell by nearly 1%. Over the past 12 months, the index has shed 12%. Meanwhile the currency fell by as much as 0.6% to 32.52 Thai baht against the US dollar earlier in the day. It later pared those losses, after suspected official intervention.
Thai Stocks Drop Most in Two Weeks on Martial Law as Baht Slips Bloomberg 20th May 2014
Thai stocks fell, sending the benchmark index to its biggest drop in almost two weeks, as the army imposed martial law nationwide amid political turmoil. The baht and government bonds retreated. The SET Index lost 1.1 percent to 1,394.69, the biggest decline since May 8. The baht weakened 0.2 percent to 32.537 per dollar, while the yield on 10-year bonds rose four basis points to 3.76 percent. Five-year credit-default swaps added two basis points to 129, CMA prices show.
Regional infrastructure fund eyes bond sale in 2016 InterAksyun 20th May 2014
The infrastructure fund set up by members of the Association of Southeast Asian Nations (ASEAN) is eyeing to sell debt papers by 2016 to help projects get long-term financing. Indonesian Vice Minister for Finance Bambang Permadi Soemantri Brodjonegoro in a panel discussion said the Asian Infrastructure Fund (AIF) hopefully can tap the cash-rich regional debt market by issuing bonds two to three years from now, effectively making it a multilateral bank for hard projects. The fund is financed with capital infusion from ASEAN-member countries and the Asian Development Bank (ADB). Brodjonegoro, who is also the chairman of the fund, said that AIF would initially dip its hands into this pool of money to jump-start infrastructure projects in the region but he hopes that with the bond issuance, the reliance on capital subscription would become less.
Local banks struggling to find foreign partners Vietnam Investment Review 19th May 2014
It appears that many foreign players are mulling alternatives to joining with local partners to bolster efficiency when it comes to mergers and acquisitions in the banking sector. The most recent development was a rumour that HSBC is looking to divest from its 20 per cent stake in Techcombank when the technical agreement between the two sides expires this June. Insiders say that it is unlikely this agreement will be extended. Notably, HSBC did not join Techcombank’s board members in the new tenure, 2014-2019. Similarly, local Mekong Development Bank (MDB) revealed that its strategic partner, Singapore’s Fullerton Financial Holdings, which holds 20 per cent of the bank, will sell its entire stake to also local Maritime Bank, after it merges with MDB. In late 2013, Japan’s OCBC sold its 15 per cent position in local VPBank. The IMF and ANZ have also already divested from local Sacombank.
Moody’s upgrade hangs on PH tax efforts The Manila Times 19th May 2014
Global credit rating agency Moody’s Investors Service said the Philippines may earn another rating upgrade if government efforts to improve fiscal health and address corruption show further progress toward real reform. In a report released by the central bank on Sunday, Moody’s Senior Analyst Christian de Guzman was quoted as saying in discussions with the Investor Relations Office of the central bank recently that the Philippines continues to surpass expectations, not only in addressing corruption but also in enhancing the gains of economic advancement, thus bolstering its case for an even higher credit rating.
PH financial system’s resources hit P12.8T The Manila Times 16th May 2014
The total resources of the country’s financial system—banks and non-banking institutions included—continued to show stability and expanded in the first quarter to P12.83 trillion, up 9.26 percent from the P10.76 trillion recorded a year earlier. Banks—consisting of universal and commercial banks, thrift banks and rural banks—posted resources that hit P10.46 trillion in the three-month period, up 24.18 percent from P8.42 trillion in the same period last year. Total resources of universal and commercial banks in the first quarter rose to P9.43 trillion, higher by 24.84 percent from P7.55 trillion a year ago, the Bangko Sentral ng Pilipinas (BSP) said.
Hot money back in April The Manila Times 15th May 2014
Hot money flow, or the movement of portfolio investments in and out of the country, showed a net inflow of $324.75 million in April, reversing the previous month’s net outflow, on optimism about the prospects of the local economy. “The net inflows arose from investor optimism about the economy’s growth and strong quarterly corporate results, ignoring the possibility of a further cut in the United States Federal Reserve’s quantitative easing program,” the central bank said. The central bank was referring to any further reductions in the bond-buying program of the US Federal Open Market Committee to stimulate the US economy, similar to the decision in March for a third monthly $10 billion cut in its bond purchases since December, pulling the program down to $55 billion from $85 billion.
Burma’s Central Bank Expected to Submit Monetary Policy The Irrawaddy 15th May 2014
Burma’s Central Bank is expected to submit a new monetary policy during Parliament’s next session, which begins late this month, a lawmaker said. The Central Bank is currently working on a plan to allow foreign banks to operate in the country, a central part of the government’s reforms to modernize the long-isolated financial sector. The Bank announced late last year that some foreign banks would be permitted to offer limited financial services during 2014, drawing opposition from local banks fearing they will be edged out by large institutions from overseas. Phyo Min Thein, a National League for Democracy lawmaker who sits on the Lower House’s financial and monetary committee, told The Irrawaddy on Thursday that the new monetary policy was expected to be submitted during the 10th session of the current Parliament, which begins May 28.
Capital market awards expected to encourage good corporate governance: BEI Antara News 14th May 2014
Indonesian Stocks Exchange (BEI) expected the Capital Market Awards (CMA) to encourage the companies to continuously operate within the tenets of the Good Corporate Governance (GCG). "The event of Capital Market Awards 2014 is expected to inspire every listed company to compete through a continuous performance growth in the market integration era," BEIs General Director Ito Warsito said in his opening remarks at the CMA 2014 held in Jakarta on the night of May 13. Ito added that by improving the corporate performance through the GCG, every listed company will also contribute to an increase in the stock growth in Indonesia, thus the CMA 2012 was also awarded to appreciate the market businessmen, especially the stocks markets members and the listed companies. "In addition to being an award, the CMA is also expected to increase the attractiveness of Indonesian stock market on the global economy, so that it can compete with other companies, especially in the Southeast Asian region," he noted.
Finance reforms in full swing The Phnom Penh Post 14th May 2014
Cambodia’s private sector is taking on a larger role in managing public finances, and companies involved in the transition say that they are well-placed to accept the added responsibility. The government began transferring close to 400,000 civil-servant salaries over to Acleda Bank, Wing and Canadia Bank in January in an effort to rid the public sector of cash payments. The three financial institutions have since been meeting with the dozens of ministries to get their business as well. Mobile payment and money transfer company Wing, which is the smallest of the three firms competing for the payroll business, has been able to gain tens of thousands of accounts thanks to its rural reach, CEO Anthony Perkins said yesterday.
Asset Management
Malaysia's Islamic bonds lure "agnostic" investors Finance Asia 21st May 2014
Malaysia’s fast-growing Islamic bond market is luring investors that are less experienced with such structures, enabling domestic borrowers to price these shariah-compliant notes tighter than conventional offerings. Hedge funds and fixed-income funds are among those emerging as significant buyers of the Southeast Asian nation’s Islamic bonds, or sukuk, which have been traditionally bought by Muslim investors seeking assets that adhere to shariah law. “Most Malaysian issuers will typically opt for sukuk issuances if the nature of business of the issuers allow them to do so,” said Thomas Meow, head of credit markets at CIMB to FinanceAsia. “Sukuk issuances are able to attract a larger pool of investors as both conventional and Islamic funds are able to invest in sukuk issuances.” "In Malaysia, investors are agnostic between conventional notes and sukuk issuances as they do not require any structure premium to be added to the pricing of Islamic issuances," he added.
Temasek maintains optimism in Thailand’s long-term investment allure ASEAN Investor 20th May 2014
Singapore’s Temasek Holdings is still confident in the Thai economy for its long-term investments despite the political limbo, a high-ranking executive says. “The situation in Thailand is obviously complex but what we think about Thailand is that there is a large population and the country is mixed with a large number of investment opportunities. The regulatory political cycle needs some time to resolve [itself],” Stephen Forshaw, managing director for strategic and public affairs at Temasek, told The Nation yesterday. Forshaw explained that his company was seeking long-term investments in this dynamic region, mainly driven by urbanisation and demand from its growing middle-class population. Urbanisation creates more demand for construction projects, accommodation, consumer goods and infrastructure to cope with the number of people flocking into the cities seeking jobs and prosperity.
Gold demand in Vietnam seen plunging as inflation slows Thanh Nien News 22nd May 2014
Gold consumption in Vietnam, the largest Southeast Asian user after Thailand, will probably shrink by more than half this year after global prices fell, the currency stabilized and the government tightened rules. Demand may drop to 25 metric tons to 30 tons from 60 tons to 70 tons in 2013, said Nguyen Thanh Long, chairman of the Vietnam Gold Traders Association, which represents traders, jewelers and banks with trading licenses. Citizens may be holding as much as 300 tons, he said, valued at $12.5 billion. The predicted drop in sales adds to signs of slowing demand in Asia, which accounts for more than half of world consumption, after gold snapped a 12-year bull run in 2013. Goldman Sachs Group Inc. and Morgan Stanley expect further price declines. Decelerating inflation and more attractive opportunities in stocks, property and bank deposits eroded demand, Long said.
Banking
Poor Access to Banking Hurts Burma’s Economy: Report Irrawaddy 23rd May 2014
Just 4 percent of people in Burma have bank savings accounts, according to a new survey conducted by the United Nations that aims to help the government improve access to financial services. The UN Capital Development Fund and the UN Development Program on Thursday launched the results of research from their Making Access Possible (MAP) project, which surveyed 5,100 people across the country. The results show that much of the population, both in rural areas and in cities, has long been cut off from formal services to help them save money, invest in their families and businesses, and borrow in hard times.
Global banks shrink S’pore office space Today Online 23rd May 2014
More and more international banks are giving up office space in Singapore, as revenue and profitability come under pressure amid stricter global banking rules and foreign labour restrictions that increase competition for local workers and make it more expensive to hire them. Global banks have vacated about 500,000sqf of leased space since 2011, enough to seat 3,800 employees, estimates by Jones Lang LaSalle Property Consultants showed. About 80 per cent of that is in the central business district, data tracked by the real estate broker revealed.
UOB ready to acquire GP Bank Vietnam News 23rd May 2014
Singapore's United Overseas Bank (UOB) is close to sealing a deal to buy 100 per cent stake in the Vietnamese small-lender GP Bank. Newswire Baodautu.vn reported this, quoting a board member of the National Monetary Policy Consulting Committee who spoke about the deal. While the price tag of the deal is yet to be disclosed, industry experts said that the amount was probably not a large one. "GP Bank is one of the nine weak banks which once ran an estimated bad debt higher than their charter capital. Buying the bank means taking over a large amount of debt; they would never pay a large amount," an expert told Baodautu.vn. GP Bank was developed from the Ninh Binh Rural Commercial Joint Stock Bank to become an urban commercial joint stock bank. It has been operating in Ha Noi since November 7, 2005. One of nine ailing banks which were forced by the central bank to restructure, GP Bank has a head office and nearly 80 branches and transaction sites nationwide, together with a workforce of more than 1,400.
CIMB eyes Phl entry Philippine Star 23rd May 2014
Malaysia’s CIMB is looking for a mid-sized Philippine bank for its second attempt to enter the local market. “We have continued to be on the search for the right way of entering the Philippine market,” CIMB chief executive Nazir Razak said during a forum Wednesday night hosted by the Ayala Group. Talks between CIMB and Philippines’ Bank of Commerce fell through last year, and later in 2013, media reports stated the Malaysian lender was now considering acquiring Philippine National Bank. “Our options are a little limited in a sense that we want to buy a platform that can be fully integrated with the CIMB ASEAN (Association of Southeast Asian Nations) platform. So we would be looking at the mid-tier space as opposed to the large banks here,” Razak said.
Indonesia’s Bank Mandiri to Boost Business, Climb the Ranks Jakarta Globe 22nd May 2014
Bank Mandiri, Indonesia’s biggest lender by assets, is banking on acquisitions and mergers to become the region’s top player. Pahala Mansury, chief financial officer at Bank Mandiri, said on Wednesday the lender aims to be in the top three among the largest banks in the Asean region. “We are setting aside up to Rp 12 trillion [$ 1 trillion] for our acquisition plan [this year],” Pahala said without naming any specific targets. Bank Mandiri’s Rp 230 trillion market capitalization puts the lender at seventh place in the list of Asean’s largest banks, according to Pahala. Budi Gunadi Sadikin, Bank Mandiri president director, said the country’s banking industry needs to consolidate to create a stronger and healthier financial system. Indonesia is home to 120 commercial banks with total combined assets of Rp 4,640 trillion as of April this year.
Retail banks prepare strategies to serve nation's poor Vietnam News 22nd May 2014
Regional retail banks need to cooperate more closely to tackle challenges, puzzle the mass market and promote microfinance so as to serve the underprivileged population better. The message was among the key themes of the 20th World Savings Bank Institute (WSBI) Asia Pacific Region Group Meeting held yesterday by WSBI and LienVietPostBank in Ha Noi. The two-day annual meeting gathered 80 bankers, managers and financial activists from 20 countries in Asia-Pacific, Africa and Latin America. Creating access to financial services is recognised as a big challenge to retail banks because half of the people living in the Asian-Pacific region do not have accounts at official financial institutions.
Nearly half of SMEs default on repayments: BIBD Brunei Times 21st May 2014
Almost half of the applicants to the Bank Islam Brunei Darussalam’s (BIBD) small and medium enterprise financing scheme defaults on their repayments, a senior bank official said yesterday. According to Pg Sanusi bin Pg Hj Ismail, senior manager of BIBD’s product development and marketing unit, Corporate Banking Division, poor business management is one of the main reasons why most SMEs default on their financing. In an interview held at the sidelines of BIBD’s seminar, Pg Sanusi said that to decrease the amount of defaulters, the bank is working with the Ministry of Industry and Primary Resources (MIPR) to educate entrepreneurs on how to manage their funds and business better.
PH should strengthen banking, agriculture The Manila Times 21st May 2014
The Philippines should strengthen its macroeconomic fundamentals in the key areas of banking and agriculture and take advantage of its positive demographic structure to be able to compete with larger markets in the upcoming Association of Southeast Asian Nations (Asean) Economic Integration in 2015, the country’s top government officials said. “Our own goal has always been to keep our own house in order and strengthen it so that when shocks do occur, we have buffers to shield us. Recently, our efforts to keep our house in order have gained more urgency in light of our preparations for Asean economic and financial integration,” said Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. during his keynote speech at the Financial Times-First Metro Investment Summit held on Monday. Tetangco said that the central bank recognizes the potential of integration but also remains cognizant of the challenges that the initiative may bring, such as in implementing the Asean Banking Integration Framework or ABIF.
Indonesian Banks Woo Remote Islanders with Floating ATMs Bloomberg 20th May 2014
Viewed with 347 years of hindsight, it was possibly history’s most one-sided trade. In 1667, when spices were worth more than gold, England and Holland agreed to divvy up two islands over which both claimed sovereignty. The Dutch took Run, a remote outpost of Indonesia’s Spice Islands, where the aroma of nutmeg, cloves and cinnamon scents the breeze. The English got what would become Manhattan. Today, while New York reigns as the world’s financial capital, Run doesn’t have a single bank branch, Bloomberg Markets magazine will report in its June issue. “Even just an ATM would be nice,” Burhan, 42, a batik-shirted local schoolteacher, nutmeg farmer and guesthouse owner, says as he sits on his porch overlooking the volcano-studded Banda Sea, 2,500 kilometers (1,550 miles) and two time zones east of Jakarta.
Standard Chartered looks to Myanmar Myanmar Times 19th May 2014
Standard Chartered Bank’s newly appointed head of ASEAN Lim Cheng Teck visited Myanmar last week, looking at the role the bank can play in Myanmar’s future. Standard Chartered opened a representative office in Yangon in February 2013, but current restrictions limit foreign banks’ operations – though reforms to open the sector to international competition have been promised. The Myanmar Times reporter Aung Shin met with Mr Lim to discuss Myanmar’s financial sector during a period of change. This interview has been edited and condensed. First of all, what makes you excited about the ASEAN market, as freshly appointed CEO for the region?
Banks Set for Financial ‘Rat Race’ Jakarta Globe 19th May 2014
Indonesian banks are bracing for a more competitive landscape this year as tight funding sources and credit risks spark concerns among the country’s lenders, according to a recent survey. The Indonesian Banking Survey 2014 conducted by PricewaterhouseCoopers (PwC) showed the nation’s economic slowdown, coupled with higher interest rates, has increased the competition for funding sources between lenders. Indonesia’s economy grew by 5.2 percent in the first quarter — its slowest growth since 2009 — with the central bank holding its highest benchmark interest rate in four years to narrow the gap in Indonesia’s current account. With lending growth surpassing 20 percent and fewer funds coming into the banking system, the loan-to-deposit ratio (LDR) reached 90.47 percent in February, compared to 84.35 percent in the same month last year, according to data from the Financial Services Authority (OJK). Bank Indonesia (BI) requires lenders to maintain their LDR below 92 percent, or they will have to increase their central bank reserve requirement by 0.2 percent.
Vietinbank report reveals bad debt increase Vietnam News 19th May 2014
Vietinbank's bad debts reached about VND6.3 trillion, or US$300 million, on March 31, an increase of 67 per cent over the end of last year, according to the bank's latest report released last week. As the largest commercial bank of Viet Nam, Vietinbank posted the debt figure in its first quarter financial report. The bad debts represented 1.78 per cent the bank's total outstanding loans, rising from 1 per cent at last year-end, but remaining secure, it said. Deposits declined 2.8 per cent and credits fell by 5.86 per cent over the first quarter, both reaching over VND354 trillion, or $16.86 billion. The total asset value was down 3 per cent at VND558.78 trillion, or $26.61 billion. Net revenues dropped 9.1 per cent over the same period last year, reaching VND4.22 trillion, or $200.95 million. Most business activities generated profits, except for securities investments suffering a loss of VND5 billion, or over $238,00
BRI to operate satellite for better services Jakarta Post 19th May 2014
State-owned lender Bank Rakyat Indonesia (BRI) on Monday signed agreements with US satellite manufacturer Space Systems/Loral, LLC. (SSL) and French satellite launch services provider Arianespace to build and launch a satellite that BRI claims will help expand its service coverage. The deals were signed by BRI president director Sofyan Basir, SSL senior vice president for programs and system David Bernstein and Arianespace senior vice president for sales and customer Jacques Breton. President Susilo Bambang Yu-dhoyono, State-Owned Enterprises Minister Dahlan Iskan and Communications and Information Technology Minister Tifatul Sembiring attended the signing ceremony.
Loan quality down slightly, lending growth slows: BOT The Nation 17th May 2014
The economic slowdown is affecting the ability of SMEs and households to repay their debt, while lending growth across all categories has slowed due to domestic economic uncertainty, the Bank of Thailand said yesterday. Anupap Kuvinichkul, senior director of the financial institutions strategy department at the BOT, said loan quality had deteriorated slightly, due to the value of non-performing loans (NPLs) having edged up during the first quarter. "The prospect of a continuous slowdown of the economy has contributed to poorer loan quality, but this is based on many factors such as the economic situation in the next period, the support from commercial banks, and the adaptation of private businesses and people who use micro-loans," he said.
Indonesian Banks Face Three Threats in 2014, Survey Says Tempo 16th May 2014
A survey held by the Pricewaterhouse Coopers (PwC) Indonesia research institute said that the Indonesian banking industry faces three challenges this year. According to PwC Indonesia's partner ofIndonesia, Jusuf Wibisana, the three challenges are the result of tight monetary policy, the rupiah depreciation, and the slowing economic growth. "These factors have shifted the government's regulations that were last year's biggest challenges," he said. The three challenges are dwindling margin pressure due to the high BI rate, the increasingly fierce competition, and increased credit risk. Of 82 respondents surveyed, 26 percent chose margin pressure as the biggest challenge while 23 percent were more concerned about increased competition and 17 percent said credit risk was the main challenge. Respondents also believed that the high BI Rate will push the economic growth rate down to the lowest point since 2009. "They said that inflation and high interest rates will slow down the growth," Jusuf said.
Banks to pay attention to credit quality intellasia 16th May 2014
In the context of many difficulties in the credit growth, many businesses are probably wondering about the difference between deposit rates and lending rates of banks (the net interest margin – NIM). Surely this will be a controversial issue, because from different angles, there will be different arguments. In terms of the overall system, Dr Can Van Luc, a banking expert said the current NIM of banks is about 2.5 percent to 2.8 percent which is the lowest possible limit. “In the current economic conditions, the current level of NIM is reasonable, because the banks would have no interest in credit operations if the NIM is further reduced”, said Luc. High or low NIM depends on customers The question now is whether the NIM can be decreased further when businesses are struggling with difficulties? According to Luc, it can not be lowered anymore, if not banks will suffer from losses. “If that results in a loss of business, the CEO will definitely be “kicked” out of the bank. For state-owned banks, the CEO will have two years in the position, but for commercial banks, the CEO may have to leave immediately after only one quarter”, Luc added. - See more at: http://www.intellasia.net/banks-to-pay-attention-to-credit-quality-35744...
State Bank Issues Circular On Foreign Investment intellasia 16th May 2014
Recently, the State Bank of Vietnam issued Circular No. 05/2014/TT-NHNN, which guides the opening and use of indirect investment capital accounts for the implementation of foreign direct investment in Vietnam. The circular applies to the following subjects: Foreign investors who are nonresidents conducting indirect investment activities in Vietnam; Organisations and individuals who are related to indirect investment activities in Vietnam. The key provisions of the circular stipulate that: All indirect investment activities of foreign investors in Vietnam must be conducted in Vietnam Dong; Transactions relating to foreign indirect investment activities in Vietnam of foreign investors must be conducted through one indirectly-invested capital account opened at one licensed bank; and Balance on indirect investment capital accounts of foreign investors are not allowed to transfer to definite-term deposits and saving deposits at credit institutions and branches of foreign banks. RELATED: Vietnam Issues New Work Permit Regulations for Foreign Employees - See more at: http://www.intellasia.net/state-bank-of-vietnam-issues-new-circular-on-f...
Banking Industry Lacks Qualified Manpower Tempo 15th May 2014
The Indonesian Banking Survey 2014 carried out by PricewaterhouseCoopers (PwC) has shown the country was still in need of qualified manpower in the banking sector, according to 44 percent of the respondents. The survey revealed staff turnover was common in the banking industry, with 54 percent of the respondents saying better salaries and incentives had been the key factors. PwC’s partner Jusuf Wibisana said the staff mobility rate, which had reached 15 percent, was alarming. “Customers might feel uncomfortable if they were served by different staffers,” he said at Hotel Mulia, Jakarta, on Wednesday, May 14, 2014. The survey indicated the lack of qualified manpower has also become one of the concerns of the respondents. Jusuf said this situation happened despite the fact that Education and Culture Ministry had earmarked 20 percent of the State Budget for education, and yet companies still had to spend more money to re-train their staff.
LPS raises its guaranteed interest rate by 25 basis points Antara News 14th May 2014
The Deposit Insurance Corporation (LPS) has raised its guaranteed interest rate by 25 basis points to 7.75 percent for rupiah deposits at commercial banks and to 10.25 percent for rupiah deposits at smallholder credit banks. In a statement issued on Wednesday, LPS stated that the guaranteed interest rate for foreign currency deposits at commercial banks remains unchanged at 1.50 percent. The new guaranteed interest rate will be valid between May 15 and September 14, 2014. According to the LPS, the guaranteed interest rate was based on several considerations, such as an upward trend in the lending rate. During the January-April 2014 period, the benchmark interest rate monitored by the LPS increased by 24 basis points. The other consideration is that the guaranteed interest rate is expected to cover 90 percent of the overall depositors who put their money in banks across the country.
Large Banks Targeted by Cyber Criminals Tempo 14th May 2014
The Financial Services Authority (OJK) noted that banking cyber crimes mostly befall large banks. "They are committed against banks with has advanced information technology," OJK's chief of the Board of Commissioners, Muliaman Hadad, said yesterday. Hadad reminded bank customers to be careful in making transactions. He said that cyber crimes are done by a number of modes, such as utilizing cameras and skimming. Therefore, Hadad said, banks have the obligation to protect their customers from cyber crime. He also asked banks to create internal policies to deal with IT-related crimes. The Indonesian Police noted that in 2013, there were 171 cases of cyber crimes with 111 suspects. According to National Police Chief Gen. Sutarman, all cases have been solved. "The last one was a Rp21 billion online theft in Bank Mandiri," he said. Sutarman said the banking industry banks can anticipate theie crimes by selecting and screening the use of information technology. He suggested banks' security system to be updated periodically. Previously, Bank Mandiri's branch in Cipto Mangunkusumo Hospital received plenty of complaints from customers claiming the funds in their accounts are diminishing since the end of last week.
Bank Mandiri upgrades its IT banking system Jakarta Post 14th May 2014
State owned lender PT Bank Mandiri says that it has upgraded its information and technology (IT) banking system. Mandiri president director Budi Gunadi said that customers' money and transactions were all safe. "Every year we invest a lot to improve our IT system so that we can detect fraud attempts straight away. We apologize for the inconvenience caused to customers who had their credit cards blocked as a result," Budi said as quoted by kompas.com on Wednesday.
Human resources in banking crucial for AEC Jakarta Post 13th May 2014
The Financial Services Authority (OJK) has stated that Indonesia wants a smooth integration for the banking sector in the ASEAN Economic Community (AEC), which will become operational by 2020. “We want to seek out the beneficial principles of the AEC 2020, and we want a constructive integration,” OJK chairman Muliaman Hadad said on Monday. Muliaman explained that Indonesia already has a strong banking industry and a large domestic market, and thus needs to be developed so that it will provide benefits to every country in the AEC. “Of course, we have to address all the issues prior to entering the AEC by 2020, which is why we [ASEAN countries] need [to have] further discussions,” he said.
E-Payments
MasterCard steps up financial inclusion initiatives Philippine Star 23rd May 2014
As one of the largest technology companies in the international payments industry, MasterCard is stepping up efforts to play a vital role in bringing down the ranks of the financially underserved, a top company official said. In an exclusive interview with The STAR, MasterCard South East Asia president Matthew Driver, said while some countries are coping up with the challenges of financial inclusion initiatives, there remains some areas of cooperation which need to be explored by both private and public sector to be able to come up with an efficient and effective business model to increase the number of people benefitting from the technology of the financial system. Driver presented during the World Economic Forum on East Asia MasterCard’s recent report on financial inclusion which profiles six markets in Asia-Pacific, Middle East and Africa (APMEA) region : India, Vietnam, Indonesia, Egypt, Nigeria and the Philippines.
ICBC Indonesia issues UnionPay credit cards Jakarta Post 22nd May 2014
Private lender PT Bank ICBC Indonesia has issued a new credit card in collaboration with China’s bank card organization UnionPay, targeting Indonesians who often travel to the world’s second-largest economy. The number of Indonesians traveling to China is estimated to reach 600,000 every year. “It is hoped the new credit card will financially help our customers who travel to or live in China, such as tourists, business players as well as students,” ICBC Indonesia card center head Yensen Aliamin said during the credit card launch on Wednesday. UnionPay cards can reportedly be used in more than 140 countries across the globe and are second to Visa in term of the value of transaction.
Western Union expands business in Myanmar Thanh Nien News 22nd May 2014
The Western Union Company, a leader in global payment services, has expanded its remittance business in Myanmar through nine local banks, the company said. The announcement, which coincided with the company’s one-year anniversary celebrations in Myanmar early this month, marked a sharp increase in the number of agents from 100 in key commercial towns to 460 across the country. Western Union is one of the first global money transfer companies to provide service in Myanmar, paving the way for formalized international money transfers after sanctions were eased in 2012. With more than 460 agents now, Western Union is the largest international money transfer network in the country. In Vietnam, Western Union cooperates with more than 30 banks to provide around 8,600 outlets.
Vietnam retailers charge card users despite central bank prohibition Thanh Nien News 19th May 2014
On Thursday afternoon, Minh Dung went to a cell phone shop on Le Van Sy street in Ho Chi Minh City's District 3, looking for a mobile phone. He chose an iPhone priced at VND 14.5 millions (US$686). After learning that Dung intended to complete his payment by credit card, a shop keeper told him he'd be charged an extra of 3 percent (around VND435,000). The shop keeper claimed the bank established fee and the shop had no choice but to comply with it. “The phone therefore cost closer to VND15 million”, Dung was quoted by Tuoi Tre (Youth) newspaper as saying. The scene played out two days after the State Bank of Vietnam filed a regulation establishing that charging customers for a single credit card transaction could cost retailers a fine of between VND30-50 million. But despite the regulation, businesses have continued charging fees on credit card payments.
Telecommunication enables digital financial solution Jakarta Post 19th May 2014
Development in information and communications technology in line with the supporting infrastructure globally has changed people’s way of life and activities in many aspects, such as dealing with financial affairs. A guy was on a motorbike; desperately racing through congested traffic to reach an ATM. He then called his sister asking for help to purchase a rare music collection. With just a few clicks on her phone, his sister who was working on a remote mountainous area made the payment. The problem was solved. “Just use mobile banking,” she advised her brother. Yes, it’s a television commercial depicting how mobile banking becomes a more important thing in the modern daily life of humans. With mobile banking, or m-banking, people can access their financial records anytime, anywhere. Even if they are away from any branch, ATMs and desktop computers, people can easily check the balance account, make fund transfers and view their transaction history, with safety and security guaranteed by the related banks.
TBank sees rise in credit card spending Bangkok Post 19th May 2014
Thanachart Bank (TBank), the country's sixth-biggest lender by assets, has stepped up monitoring of its credit-card holders' spending behaviour after card spending growth doubled the industry rate in the first quarter. TBank's credit-card spending rose by 10%, against 4-5% for the industry as a whole, during the January-March quarter — the first time the bank's card spending has outpaced the industry, said first vice-president Prinya Jinantuya. He said the possible causes of the rise in spending include credit line increases, card upgrades and an attractive promotional campaign to celebrate the fifth anniversary of the bank's credit-card business.
Mandiri withdraws cards over skimming indication Jakarta Post 16th May 2014
State-owned lender Bank Mandiri (BMRI) has begun to withdraw and replace its customers’ debit cards over indications of skimming, an executive has said. According to Mandiri senior executive vice president for transaction banking Rico Usthavia Frans, the bank started receiving reports from its customers last Friday. “There were indications that their card details had been skimmed at ATMs. We then examined other cards and saw similar indications,” he said on Monday. “So we began replacing customers’ cards last Friday.” Rico declined to provide further details on the number of cards that had been replaced, but said the amount of money lost varied from one customer to another.
Insurance
AIA looks overseas as investment lags Bangkok Post 23rd May 2014
AIA Thailand, the country’s biggest life insurer by total premiums, is revving up its foreign property investments to offset limited bond supply and an unfavourable domestic investment market at home. “Government bonds are getting scarcer, particularly with the absence of a functioning government and a freeze of the government’s 2-trillion-baht infrastructure plan,” said Anucha Laokwansatit, AIA Thailand’s general manager and CIO. “We’re looking to expand our investments, notably to foreign bonds and equities.”
Global: 66 insurance CEOs sign statement to act on climate change Asia Insurance Review 22nd May 2014
Twelve top honchos of re/insurance companies in Asia and Australia have joined 54 other chief executives of the world's leading insurers in confirming their commitment to The Geneva Association's Climate Risk Statement - a set of guiding principles on the substantial role insurance can play in global efforts to tackle climate-related risks. The 12 represent major companies from Australia, China, Japan, Singapore and South Korea. They represent names like ACR Capital Holdings, China Pacific Insurance, Samsung Life Insurance, Suncorp, and Tokio Marine & Nichido Fire Insurance. In a release, The Geneva Association said that its Climate Risk Statement will provide the foundations on which the direction of future climate-related initiatives by the leading international insurance think tank will be based.
Nippon Life Buys 20% Stake in Indonesia’s Sequis Life Jakarta Globe 22nd May 2014
Nippon Life Insurance said on Wednesday it has agreed to buy a 20 percent stake in Indonesia’s Sequis Life for 4.87 trillion rupiah ($423.9 million), joining its Japanese peers who are expanding in rapidly growing Southeast Asian markets. Asuransi Jiwa Sequis Life, part of Indonesian conglomerate Gunung Sewu Kencana, is a middle-sized life insurer with 2.27 trillion rupiah in gross premiums and 9.19 trillion rupiah in assets in 2013. “The Indonesian life insurance market has been growing robustly against the backdrop of the fourth-largest population in the world of around 250 million and a growing middle class population,” Nippon Life said in a statement. “This high growth is expected to continue in light of the lower life insurance penetration in Indonesia relative to those of developed nations.” Nippon Life, Japan’s largest private-sector life insurer, said the deal is subject to approval by Indonesian authorities.
Singapore: First family cyber risk policy to be launched soon Asia Insurance Review 21st May 2014
Singapore is the first country outside of France in which French insurer AXA will be introducing a new insurance plan to help individuals and families mitigate cyber risks, including the damage to one's "electronic reputation". While businesses already have access to cyber risk insurance, the plan is a first for individuals and families. Under the cyber-protector indemnity policy to be available in Singapore by the end of this month, AXA will pay for the losses incurred over things like the loss of one's "e-reputation", identity theft, unauthorised Web transactions, and disputes with online merchants. This means, for instance, that consumers can get compensation for damaged or undelivered goods bought online or if excess funds had been deducted from their bank accounts as a result of online theft. It also covers things such as psychological assistance and even "information removal service" in cases of online defamation. The cyber-protector policy will cost S$148 (US$118) a year per person.
Insurers face largely untapped integrated Asean market The Manila Times 21st May 2014
AN integrated Association of Southeast Asian Nations (Asean) Economic Community (AEC) in 2015 will be an opportunity for global insurance players to increase their penetration rate in the region, insurance regulators said. According to Evelina Pietruschka, secretary-general of the Asean Insurance Council (AIC), the integration will benefit both the developed and developing markets. “Insurance from developed markets can tap the opportunities of the growing markets, while those from developing markets can benefit by speeding up the learning curve and coming up with innovative ways to compete and respond to consumer needs,” Pietruschka said in a speech during the AIC Roadshow Presentation on the 2015 AEC Integration Plan held on Wednesday.
Insurers See Rise In Overall Net Claims Incurred Bernama 21st May 2014
Insurance operators in Malaysia have registered an increase in overall Net Claims Incurred(NCI) over the past three years. In 2011, the overall NCI recorded was RM6.40 billion, RM6.48 billion in 2012 and RM7.09 billion last year. Malaysian Insurance Institute (MII) director Datuk Syed Moheeb Syed Kamarulzaman said the statistics also showed the ability and strength of insurers to give compensation anytime needed. "But, the rising claims trend and risks involved requires insurers to mitigate the losses. "Any compensation is economic waste to the country.Thus, there is a need for the industry to instill risk management practices into business strategy, by also educating customers to understand the real function of claims and do away with avoidable ones," he added.
Global: Re/insurers yet to allow for climate change in modelling Asia Insurance Review 20th May 2014
Whether or not a direct result of climate change, the number and frequency of extreme weather events have increased, but insurance and reinsurance companies have coped well so far, even when re/insurers which have invested in studying climate change currently do not directly allow for it in their pricing, according to Standard & Poor's. “Our view is that many of the insurers and reinsurers we rate have processes in place to monitor the potential impact of climate change on extreme weather. We consider that re/insurers have the processes in place to ensure that they can adjust premiums for any gradual increase in weather-related claims in the future. However, even those that have invested the most in understanding the impact of climate change currently don't explicitly allow for it in their pricing and modelling,” said the international rating agency.
Philippines: Insurers winding up must also have licences Asia Insurance Review 20th May 2014
Insurance companies in the process of a run-off or winding up their affairs need to continue to apply for certificates of authority with the Insurance Commission (IC), according to the head of the insurance regulator. Insurance Commissioner Emmanuel Dooc has issued a circular to insurers stipulating this requirement even if the insurance companies in winding up procedures are no longer selling insurance products to the public, reported the Business Mirror. The circular was issued following the Supreme Court’s affirmation of the jurisdiction of the IC over insurance companies that are no longer selling new products to the public but are still operating solely for the purpose of servicing existing plan holders.
Vietnam: Anti-China riots could cause insurers at least US$332 mln Asia Insurance Review 19th May 2014
Last week's anti-China protests in Vietnam may take a heavy toll on Taiwan's major non-life insurance companies, which are counting their losses as hundreds of Taiwanese firms there halt operations due to property damage and safety concerns. It may take years for non-life insurance companies to recover from losses of about NT$10 billion (US$332 million) caused by the unrest, local media reported, citing unnamed sector analysts. Among the insurers is Cathay Century Insurance whose preliminary estimates showed that 35 of its customers are affected, but the number is not final as the situation is being assessed. Cathay Financial president Lee Chang-ken told the Taipei Times. “We remain in the process of collecting damage claims that appear to be US$3.5 million for the time being,” Mr Lee said.
RB offers insurance Brunei Times 19th May 2014
Flag carrier Royal Brunei Airlines has introduced an online travel insurance service to protect their customers against “unforeseen disruptions” to their journey.” RB had partnered with the National Insurance Company Berhad and Allianz Global Assistance to introduce the purchase of travel insurance on their web portal www.flyroyalbrunei.com. “The new travel insurance policy protects customers against unforeseen disruptions to their journey by providing them with 24/7 access to travel and medical assistance globally,” RB said in a statement issued yesterday. RB said the comprehensive coverage available under the policy will ensure peace of mind for passengers at an affordable cost. It is also part of the company’s initiative to “create a seamless travel service experience” on their web portal.
OJK set to launch microinsurance pilot project for the poor Jakarta Post 17th May 2014
The Financial Services Authority (OJK) is preparing a new insurance pilot project in several provinces as part of the agency’s efforts to promote micro-insurance programs, a senior official has said. The OJK is currently working with the Association of General Insurance Companies (AAUI) and the Indonesian Life Insurance Association (AAJI) to design four basic microinsurance products, according to OJK director for sharia non-banking financial industry Moch. Muchlasin. The products would cover four segments, namely personal accident insurance, term life insurance, fire home insurance and business interruption insurance, he said on Friday. “It will go for six months and take place in the provinces of Banten, Central Java, East Java, West Java and Yogyakarta. We are collaborating with the TNP2K [the National Team for Accelerating Poverty Allevation] as well to address areas in those provinces that need micro-insurance the most,” Muchlasin added.
Global: Lloyd's urges incorporating climate change in risk models Asia Insurance Review 14th May 2014
Lloyd's of London, the world's biggest insurance market, has for the first time called on insurers to incorporate climate change into their risk models. In a report titled “Catastrophe Modelling and Climate Change”, Lloyd's states that with the existence of climate change, and the effect it is having globally, the time has come for the insurance industry and catastrophe modelling firms to recognise factors such as surface sea level and air temperature rises throughout their models. Lloyd's added: “While climate change trends may be implicitly built into existing catastrophe models, given the heavy use of historical data in constructing them, these trends are not necessarily explicitly incorporated into the modelling output.”
Malaysia: Life insurers settle 76% of total MH370 jet exposure Asia Insurance Review 14th May 2014
Malaysian life insurers have paid over MYR14.2 million (US$4.4 million) in compensation payouts to the family members of passengers with life insurance onboard the Malaysia Airlines (MAS) flight MH370 which disappeared in the Indian Ocean two months ago. Life Insurance Association of Malaysia (LIAM) president, Mr Vincent Kwo, said in a statement: “The total amount of claims paid to the next of kin to date stands at approximately MYR14.2 million out of a total exposure of MYR18.7 million. A total of 184 policies were issued by life insurance companies in Malaysia.
Cambodia: Insurers agree on minimum fire premium rate Asia Insurance Review 14th May 2014
Seven insurance firms have agreed on a floor rate for fire premiums to avoid fierce price undercutting in an industry already operating on tight profit margins, the Insurance Association of Cambodia (IAC) has said. The new minimum rate is to take effect from 1 July. The pact, made by members of the IAC, aims to protect the industry’s biggest revenue generator - fire insurance - which accounted for a third of total revenue in the sector for the first three months of this year, reported Cambodia Daily. IAC chairman Mr Chhay Ratanak said that insurance companies had failed to adhere to a previous minimum premium rate. He is confident that this time, insurers would collaborate in accordance with more structured regulations that would ensure a healthy industry.
Singapore: 24% Q1 surge in sales gives life sector a good start Asia Insurance Review 14th May 2014
Sales of both single and annual premium products shot up by 24% for the first quarter of this year, giving Singapore's life insurance sector a good start to the year, according to the Life Insurance Association (LIA). The trade association said that the weighted new business premiums totalled S$698.7 million (US$560.44 million) for the three months to 31 March, an increase of 24 per cent compared with the same period a year ago. Sales of annual premium products for the quarter rose by 24% over the same period last year to S$530.5 million. Single premium product sales soared by 27% in the first quarter to S$168.2 million, of which 15% comprised sales funded by customers' central provident funds.
Myanmar: Accident insurance made mandatory wef 8 May Asia Insurance Review 14th May 2014
With effect from tomorrow, drivers and passengers will have to purchase a newly introduced insurance policy specifically covering them in case of accidents on the country's highways, as the number of accidents on Myanmar's roads appears to be rising. In an announcement in the state media on Monday, the Insurance Business Supervisory Board said that government-run Myanma Insurance and 11 private insurance companies will begin selling a policy named “Special Travel Insurance for Expressways” tomorrow.
Singapore: Mixed expectations of more commission disclosures Asia Insurance Review 13th May 2014
Nearly half of the insurance professionals in Singapore polled in a recent survey feel that regulatory requirements for greater commission disclosures are "very likely" to take effect over the next three years. In addition, over 90% of the professionals polled feel that regulatory changes would have a greater impact on the industry over the next 12 months, reported International Adviser which conducted the survey. A mix of senior bancassurance selectors and wealth management professionals were sampled for the survey, which covered a range of industry-specific issues, including business practices, industry outlook and regulations.
Malaysia: Banks and post offices vital to rural insurance sales Asia Insurance Review 13th May 2014
Banks and post offices play an important role in achieving the Malaysian government's target for the proportion of the insured population to reach 75% by 2020 from the current 54%, according to a senior insurance industry executive. Mr Vincent Kwo Shih Kang, President of Life Insurance Association of Malaysia, said the two distribution channels could reach out to currently under-served markets such the rural and semi-urban areas, reported the Bernama news agency. "In the past, the focus of life insurance and takaful has always been the urban areas.”
Market Regulation
SME credit guarantee boost eyed Bangkok Post 23rd May 2014
The Finance Ministry is in talks with an international institution about coming together to provide additional credit guarantees covering up to half the value of small and medium-sized enterprise (SME) loans in a bid to dispel lender concerns about bad loans and encourage them to extend new ones. Permanent finance secretary Rangsan Sriworasart said the ministry planned to guarantee SME loans beyond the 18% limit of the Thai Credit Guarantee Corporation TCG) but not exceeding 50%. During these tough times of economic slowdown, SMEs are the most vulnerable to the political turmoil, which has taken a toll on the already sluggish economy, as seen by surging non-performing loans (NPLs) and special-mention loans among SMEs at several banks.
Report finds Islamic finance yet to be fully tested The Malaysian Insider 22nd May 2014
Islamic finance weathered the global financial crisis better than conventional banking, but it was not completely immune and has yet to address potential risks, a report by a standard-setting body for the industry says. Growing pressure on Islamic banks' profitability, liquidity management, asset quality and capital adequacy were outlined by the Malaysia-based Islamic Financial Services Board (IFSB). Islamic finance, which has its core markets in the Middle East and Southeast Asia, follows religious principles that ban interest and shun outright speculation. As such, Islamic bank balance sheets were free from sub-prime loans and structured products that turned sour in 2007, triggering a chain of events that threatened to cause a global financial meltdown.
State capital’s representatives at banks – who are they? Vietnam Bridge 22nd May 2014
Individuals who represent the state’s capital at commercial banks are also officials working for state management agencies. This practice is causing concern among those who believe it to create unfair competition among banks. Though the State has equitized most of its banks, it continues to hold controlling stakes them. The state’s capital at the institutions is managed by its representatives – in most cases, officials from the State Bank of Vietnam. In general, the State Bank dispatches more than one official to each commercial bank. Each official is responsible for a certain percentage of the state’s capital. This allows for dispersing risk, as power is not concentrated in anyone individual, and allows those officials to monitor each other. The “power formula” the State Bank has been applying so far is as follows: each chair of the board of directors of a bank supervises 30-40 percent of the funds, the CEO manages 30-40 percent, while a member of the board, who concurrently is an officer of the State Bank, manages the remaining stakes.
Govt replaces Mandiri’s commissioners Jakarta Post 22nd May 2014
Four members of the board of commissioners (BoC) of Bank Mandiri, one of Indonesia’s largest banks, were ousted in a major shake-up during its extraordinary general shareholder’s meeting Wednesday. The government, which is the majority shareholder of the bank with 60 percent, installed Mahmuddin Yasin as Mandiri’s president commissioner, Askolani as commissioner and Aviliani and Anton Hermanto Gunawan as independent commissioners. Yasin, who currently serves as deputy minister at the State-Owned Enterprises Ministry (SOE), replaced seasoned banker Edwin Gerungan who was appointed president commissioner in 2005. Yasin, who has degrees in economy, business administration and management was the vice chairman of the Indonesian Bank Restructuring Agency (IBRA) between 2000 to 2001.
Macro-prudential surveillance will build a strong financial industry Brunei Times 21st May 2014
A COMPREHENSIVE macro-prudential surveillance approach is needed to build a robust and resilient financial industry, a senior monetary official said yesterday. “In order to maintain financial stability, it’s important that bank supervisors remain vigilant to be able to respond to the challenges and risks that will be brought by a financial crisis,” said Hjh Lily Hj Kula, deputy managing director of the Autoriti Monetari Brunei Darussalam (AMBD). In a speech delivered at the opening ceremony of the the South East Asian Central Banks (SEACEN) -Toronto Centre’s course on finance, Hjh Lily stressed the importance of macro-prudential surveillance. She said that there are lessons to be learned from the 1997 Asian financial crisis and the 2007 global economic slowdown which created systemic issues that have huge macroeconomic costs. This pushed most central banks to focus on macro-prudential policy and surveillance.
IFC helps Vietnamese banks improve sustainable project lending, curb risks Vietnam Investment Review 19th May 2014
IFC, a member of the World Bank Group, is helping Vietnamese banks better manage environmental and social risks in their lending operations to improve the sustainability of projects they finance locally and abroad and strengthen their portfolio performance. The information was released by IFC at a banking workshop held recently in Hanoi by IFC and the Institute of Manpower, Banking and Finance. Cat Quang Duong, vice head of the Department of Credit for Economic Sectors under the State Bank of Vietnam (SBV), said a circular on assessing environmental and social risks which is being compiled by the SBV in cooperation with IFC will be promulgated next month. “Currently, preparations for enacting the circular are about to finish,” said Duong.
Vietnam to resume high-profile trial of private bankers Thanh Nien News 19th May 2014
A Hanoi court will re-open the high-profile trial of nine former executives from Asia Commercial Bank (ACB) and an associated company Tuesday. The trial was adjourned on April 16 after a half-day of hearings after one of the defendants – 75-year-old Tran Xuan Gia – filed a motion for a continuance with the court. Gia, who was being treated at a local hospital for high blood pressure, asked to be absent from the proceedings due to his health problems. The former Minister of Planning and Investment served as chairman of ACB between 2008 and September 2012. The resumed trial is scheduled to last until June 5. ACB's co-founder and former vice chairman Nguyen Duc Kien, 50, faces charges of “engaging in illegal business activities,” “intentionally violating state regulations on economic management,” in addition to fraud, and tax evasion.
OJK Explains Steps to Anticipate Customer Data Theft Tempo 19th May 2014
Lucky Fathul Azis Hadibrata, deputy commissioner of strategic management of the Financial Services Authority (OJK) instructed banks to perform three steps to anticipate burglary using the automatic teller machine and bank card, which had happened to a number of banks within the past few days. The steps include profiling transaction, blocking suspicious transaction and replacing customers' bank card. "We have conveyed these three steps to banks, especially those affected by customers’ data theft," he said last weekend. Lucky said that OJK had summoned a number of banks to evaluate how well they handle the case, including Bank Mandiri, which had recently been exposed to theft. Moreover, he said that communications between bank management and customers is necessary to solve the case as quickly as possible.
Foreign banks to face lending restrictions Myanmar Times 18th May 2014
The Central Bank of Myanmar (CBM) will restrict foreign banks from providing loans to local business at the initial stages of their operation, though will gradually loosen these limits, according to its vice governor U Set Aung. Foreign banks are currently permitted only to open representative branches with a limited number of activities, though officials have pledged to eventually allow foreign-owned banks to operate in Myanmar. “After this initial period the Central Bank will give permission to foreign banks to provide loans to local businesses,” he said in an exclusive interview with The Myanmar Times. He added there is not yet a concrete timeline for how long foreign banks will be restricted from lending to local businesses or indeed when foreign banks will be allowed to begin other banking activites. The CBM previously announced it will not provide retail licences to foreign banks, restricting them instead to wholesale banking.
BI to review banks’ antifraud mechanisms Jakarta Post 17th May 2014
Bank Indonesia (BI) plans to review the antifraud mechanisms of all Indonesian banks following a card-skimming incident, which affected Bank Mandiri customers last week. BI Deputy Governor Halim Alamsyah said in Jakarta on Friday that the inspections would be conducted in the near future and would involve reevaluating the security measures of the banks’ payment systems in order to prevent further incidents of fraud. “We will examine whether all the banks have proper antifraud management strategies and secure payment systems in place to handle such cases,” Halim said on Friday.
OJK Ends Share Buyback Easing Rules Jakarta Globe 15th May 2014
The Financial Services Authority, known locally as the OJK, announced on Wednesday that it had terminated its policies that relaxed requirements for listed companies to conduct a share buyback in improved economic conditions. The OJK had allowed listed companies to buy shares back from investors without approval from shareholders should the market fluctuate significantly. In its statement, the OJK said the withdrawal was announced after “several market indicators show that the Indonesia Stock Exchange [IDX] is no longer under pressure and was not experiencing significant fluctuation.” “Furthermore, the regional and national economic condition points to growth and more positive development trends,” the OJK said in the statement. The OJK eased the buyback requirements last year after the Jakarta Composite Index fell 23.91 percent in the space of three months. The JCI has clawed back 16.79 percent since the start of this year.
OJK, BI to talk banking security Jakarta Post 14th May 2014
Jakarta: The Financial Services Authority (OJK) says it will coordinate closely with Bank Indonesia (BI) to improve the banking system in the country, following a recently revealed skimming case allegedly involving state lender Bank Mandiri. Banking supervisory division executive Nelson Tampubolon said a better system needed to be created to prevent such information and technology-based skimming from recurring. “We will improve the quality of our banking-security system. We are going to talk about this with BI,” Nelson said in Jakarta on Tuesday as quoted by Antara news agency. He said that the OJK would review a number of regulations that were related to customers’ fund security. “We want every bank to review its security system. The current system is good but some people still can find loopholes to skim it,” he said, adding that banks would need to conduct periodic security-system reviews.
BSP orders banks to protect consumers The Manila Times 14th May 2014
A comprehensive consumer protection framework is now an integral part of banking supervision to ensure that the Philippine financial system will remain stable, the central bank said. In a press briefing on Wednesday, Nestor Espenilla Jr., deputy governor for the Supervision and Examination Sector of the Bangko Sentral ng Pilipinas (BSP), said the Monetary Board has approved the adoption of a Financial Consumer Protection Framework for the Philippines. The new framework aims to ensure that BSP-supervised financial institutions (BSFIs) develop a culture of fair and responsible dealings while continually protecting the welfare of financial consumers.
Shariah Scholars to Get Sukuk Templates to End Disputes Jakarta Globe 13th May 2014
The International Islamic Financial Market is working on common templates for structuring sukuk to reduce delays caused by disagreements between Shariah scholars. The standards-setting body is drafting frameworks starting with leasing contracts known as Ijara, chief executive Ijlal Ahmed Alvi said in a May 6 interview in Jakarta. Bahrain-based IIFM is responding to feedback from members including the Islamic Development Bank and the Malaysian and Saudi Arabian monetary authorities, he said. Worldwide Islamic debt sales have grown by an average of 35 percent over the last five years, straining the ability of religious experts to approve offerings and highlighting the need for common global standards. Indonesia’s government plans to reduce sales of Ijara sukuk as some scholars say the structure the country uses isn’t fully Shariah-compliant, Vice Finance Minister Bambang Brodjonegoro said last month. “Islamic finance is growing at a good pace, but what we still need is unification,” said Alvi. “Having a unified set of standards would make the market more cost-effective and efficient.”
CTA reverses ruling on tax treaties Philippine Star 13th May 2014
Following the decision of the Supreme Court in the landmark case of Deutsche Bank AG Manila Branch vs. Commissioner of Internal Revenue, the Court of Tax Appeals (CTA) reverses its previous rulings on the issue of the application of tax treaties. Prior to the Deutsche Bank case, the CTA has consistently upheld the mandatory application of Revenue Memorandum Order (RMO) 1-2000 which requires the filing of an application for a tax treaty relief with the Bureau of Internal Revenue (BIR) at least 15 days before the transaction i.e. payment of dividends, royalties, etc., accompanied by supporting documents justifying the relief. Non-compliance with the requirements under RMO 1-2000 warrants the denial of the claim for tax refund or tax credit.
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