| Market Development
Temasek names three new board members Channel NewsAsia 9th Jun 2014
Singapore investment company Temasek Holdings has announced three additions to its board, increasing the number to 13. Mr Robert Ng Chee Siong and Mr Bobby Chin Yoke Choong will join the Temasek Board with effect from 10 June 2014, while Mr Peter Robert Voser will take up his appointment on 1 January 2015. The three new appointments would add to the depth and breadth of the Temasek Board, Chairman Lim Boon Heng said in a statement on Monday (June 9). "They are all experienced business builders and corporate leaders in regional and international arenas, who will add depth and useful perspectives to our board deliberations," he said. Mr Ng is currently chairman of the Hong Kong-based Sino Group, a property giant whose assets include the Fullerton Hotel in Singapore. He is also vice chairman of M+S Pte Ltd, where he played a key role in spearheading the real estate joint-venture initiative between Malaysia's Khazanah Nasional and Temasek.
BRI microloans hit Rp 96.5 trillion in 5 years Jakarta Post 9th Jun 2014
Bank Rakyat Indonesia (BRI) has been aggressively pushing for the growth of microbusinesses through its micro loans program (KUR), doling out Rp 96.5 trillion-worth of loans by April 2014 since 2007. BRI corporate secretary Budi Satria said as quoted by kontan.co.id that the bank distributed Rp 9.5 trillion in loans for more than 700,000 debtors between January and April 2014, while in 2013, the bank distributed Rp 87 trillion in loans. Budi explained that despite the expansive loans given so far, the bank remained cautious, as shown by its 2.34 percent non-performing loans rate. “We are targeting micro-scale and novice businessmen, especially those operating at traditional markets and centers of economic activities,” he said recently. “But in addition to our expansive move, we also provide assistance. As you can see, the non-performing loan rate for KUR is at an ideal level,” he added.
New MFI in town, ‘more still needed’ The Phnom Penh Post 9th Jun 2014
ORO Financecorp Plc held its official launch on Friday, joining the growing ranks of microfinance institutions in the Kingdom. ORO Financecorp started providing business, agricultural and tractor loans in January with a $4 million capital investment from Seng Enterprise Co Ltd of Cambodia and Creed Asia Investment Ltd of Japan. CEO Chet Kimchin used Friday’s belated launch to talk up the company’s potential. “Only 3.7 per cent of the total population of Cambodia use banking services, while 60 per cent of Vietnam’s population already have [bank accounts]; therefore, compared to other countries in the region, we have more than 90 per cent of market share remaining to catch up,” Kimchin said. “We will differentiate ourselves from other MFIs with new and creative products with fewer requirements, and with competitive interest rates – rates that can compete in the market.”
Stock exchange woos bank interest Myanmar Times 8th Jun 2014
Private banks have the strongest potential to act as security companies for the planned Yangon stock exchange, according to Sumiyuki Kazama, a senior executive with exchange partner Daiwa. Regulations forming a Securities and Exchange Commission (SEC) have been drafted but not yet approved. After the SEC is set up it can issue rules governing what firms can fill securities roles such as dealers, brokers and underwriters, as well as rules licensing the exchange itself. Several Myanmar banks, including Asia Green Development, United Amara and CB, were invited to a May 31 conference partly in an effort to pique their interest about eventually acting as security companies, said Mr Kazama. Daiwa officials pointed to IT infrastructure and skilled labour as two important areas that need to be developed.
Bourse could help local business grow: VC exec Brunei Times 6th Jun 2014
The eventual setting up of a stock exchange in Brunei will strengthen the local business industry and push local companies to grow to the next level, co-managing director of local venture capital firm Seri Venture Capital Management Sdn Bhd said recently. When asked for his opinion on how Brunei’s own bourse would help local companies, Kevin Koo told The Brunei Times a stock exchange would bridge the gap between a company’s owner and the public investors as well as give companies another means to obtain additional capital for growth. The existence of a stock exchange will also “take the entire business of the country to the next level,” he said. The Autoriti Monetari Brunei Darussalam (AMBD) is paving the way for the establishment of a stock exchange in the country, according to a previous report. Late last year, the Sultanate’s central bank signed a memorandum of understanding with the Securities Commission Malaysia to enhance cooperation in capital markets.
UNDP moves out of microfinance Myanmar Times 6th Jun 2014
The United Nations Development Progrmme (UNDP) transferred its Myanmar microfinance assets to Pact Global Microfinance Fund at a Nay Pyi Taw ceremony on June 4. The move will allow Pact NGO to independently run the microfinance operations after many years of being the lead agency in the UNDP’s Myanmar microfinance programme, officials said. UNDP began in 1997 as the pioneer microfinance project in Myanmar “at a time when such services were nonexistent”, said UNDP country director Mr Toily Kurbanov. “Now with the necessary legislative changes and local capacities developed through our project, other service providers can carry on with the work we started,” he said. The UNDP’s Myanmar microfinance programme was the country’s largest non-government small loan finance project, though the industry has seen increased international interest following the passing of the Microfinance Law.
Thai shares post best weekly gain since January on policy hopes The Malaysian Insider 6th Jun 2014
hai shares closed above seven-month highs today, ending the week with their best gains since January, due to buying in consumer and construction shares as the government's investment plans revived economic outlook. The SET index was up 0.3% at 1,458.02, itshighest close since October 24. The benchmark rose 3% on the week, Southeast Asia's best performer, in part driven by shares in the commerce sector. Shares of retailers received a boost after the military government's acceleration of rice payments to farmers was seen to indicate better urban spending prospects. Big C Supercenter jumped 9.5% on the week to an around seven-month high. The Commerce Ministry said prices of many consumer goods would be capped for six months to November to hold down living costs, boosting the economy and confidence. Foreign investors bought Thai shares for a fifth straight day on Friday. Their net buying this week was worth 8 billion baht ($245 million) versus net selling of 33 billion baht (RM3.2 billion) in nine sessions since the imposition of martial law on May 20.
Stock exchange will protect investors, says deputy finance minister Mizzima 5th Jun 2014
A stock exchange must be established to help protect ignorant investors, Deputy Finance Minister Dr Maung Maung Thein said in the Amyotha Hluttaw on June. “If we do not establish a stock exchange, people may be cheated out of their money by others posing as public companies,” said Dr Maung Maung Thein. "During the rule of the previous government, the money of the people was misappropriated by people acting falsely as saving and loans co-operatives," he said. The deputy minister said there were an estimated 200 companies in Myanmar with the potential to list on the stock exchange due to open in October 2015. But only five or six companies would meet the conditions for listing, which included transparency, international accounting standards and tax compliance.
ADB: East Asia bond market buoyant Bangkok Post 5th Jun 2014
Local and offshore demand for emerging East Asia’s local currency bonds is rising again and should continue given strong economic growth prospects in the region, says the Asian Development Bank’s (ADB) latest Asia Bond Monitor. "Most emerging East Asia bond markets have regained their bounce," said Iwan J Azis, head of ADB's Office of Regional Economic Integration. "Thailand’s bonds, though, could buck the trend given recent political upheavals and investors there are likely to be cautious for some time." Despite the recent improvements, the Asia Bond Monitor warns that markets could still be jolted by the ongoing tapering in US quantitative easing, the slowdown in economic growth in China or moves by the European Central Bank to counter the threat of deflation. Only by taking the lead in implementing better regulation and oversight of the financial system can Asia mitigate these risks. East Asia is defined as Hong Kong and China, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
Moody's: Malaysia's Sukuk market to grow 10 per cent over 2014 and 2015 CPI Financial 5th Jun 2014
"The 10 per cent growth in Malaysia's Sukuk market over 2014-15 is in line with our positive view on the long-term growth trends in the global Sukuk market," says Philipp Lotter, Moody's Managing Director for the Corporate Finance Group in ASEAN. "Given the deep local capital markets and strong support from thegovernment, Malaysia will remain the world's largest Sukuk market for the foreseeable future although regional and global competition will develop over the next two to three years," says Khalid Howladar, Moody's Global Head for Islamic Finance. "Some two-thirds of the approximately $290 billion outstanding Sukuk were issued in Malaysia. We expect the remaining one-third to stay fragmented because a growing number of new and emerging Sukuk issuance markets, such as Indonesia, Singapore and Hong Kong are tapping into this fast-growing asset class although Saudi Arabia is showing strong domestic potential," adds Howladar.
Invest Malaysia 2014 To Showcase Malaysia’s Competitiveness As ASEAN’s Multinational Marketplace Mondo Visione 5th Jun 2014
The 10th Invest Malaysia institutional investment conference this 9th and 10th June will showcase Malaysia’s unique advantage as ASEAN’s Multinational Marketplace, presenting global fund managers with direct access to the diversity, sustainability and multinational growth of Malaysia’s capital market. Organised by Bursa Malaysia Berhad (“Bursa Malaysia”) and CIMB Investment Bank Berhad (“CIMB”), Invest Malaysia Kuala Lumpur 2014 (“IMKL2014”) will showcase more than 50 companies listed on Bursa Malaysia, many of which are leaders in key sectors across ASEAN. IMKL 2014 will be officiated by Yang Amat Berhormat Prime Minister Dato’ Sri Mohd. Najib Tun Haji Abdul Razak. He will deliver the Keynote Address and host an open dialogue on Malaysia’s competitiveness as a market on the move towards a developed nation status. Dato’ Tajuddin Atan, CEO of Bursa Malaysia, emphasised, “The PLCs on showcase at IMKL 2014 highlight the diversity and sustainability of Bursa Malaysia as a highly competitive marketplace in the region. Malaysian PLCs are transitioning into multinationals and competing well on the global stage. In some cases they are driving sectors in ASEAN and beyond and this development has propelled Bursa Malaysia into one of the leading marketplaces for investors looking to tap into the growth of this region.”
Vietnam’s bond market sees rapid growth in Q1: ADB Thanh Nien News 5th Jun 2014
Vietnam was the fastest growing bond market in emerging East Asia during the first quarter of this year, according to a report from the Asian Development Bank (ADB). Emerging East Asia is defined as China, Hong Kong (China), Indonesia, Republic of Korea, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. “Most emerging East Asia bond markets have regained their bounce,” said Iwan J. Azis, Head of the ADB’s Office of Regional Economic Integration, in the report released Wednesday.
Thai funds buying into equities Bangkok Post 4th Jun 2014
When the military coup spurred foreigners to pull money out of the Thai equity market late last month, the nation’s top-performing stock investors jumped at the chance to take the other side of the trade. BBL Asset Management Co, the manager of Thailand’s best-performing equity fund during the past five years, has been boosting stock holdings as a bet the junta will accelerate spending to shore up the economy. The Thai unit of Aberdeen Asset Management Plc, which runs the nation’s second-best performing fund, is also buying amid inflows from local clients. No other stock market in Southeast Asia has rallied more than Thailand’s since the May 22 coup as local investors piled into shares at the fastest pace this year last month. While bears say the military takeover has failed to resolve conflicts that led to more than six months of political deadlock, Thai money managers are betting the junta will fast-track measures needed to bolster an economy that contracted by 0.6% in the first quarter.
Bullish SET aims to triple daily trade Bangkok Post 4th Jun 2014
The Stock Exchange of Thailand (SET) has set an ambitious target to lift its daily average trading turnover to 100 billion baht by 2020 as part of an effort to underscore its role as a leading regional exchange and one of the world's most attractive markets, its newly appointed head says. The SET's daily trading value has averaged 32-33 billion baht this year. The exchange largely continues to adhere to the 2014 business plan outlined under former president Charamporn Jotikasthira, president Kesara Manchusree said during her first press briefing since she took office this month. She said the bourse is likely to achieve its target of achieving 210 billion baht in market capitalisation from newly listed companies this year after reaching 91 billion baht by the end of last month.
Philippines fastest growing corporate bond market in East Asia The Manila Times 4th Jun 2014
The Philippines continues to have the fastest growing corporate bond market in the emerging East Asia region, expanding by 27.9 percent year-on-year in the first quarter of 2014, Manila-based lender Asian Development Bank (ADB) said. In the latest Asia Bond Monitor report, ADB said that the total outstanding local currency (LCY) corporate bond market of the Philippines during the quarter reached $15 billion from the $13 billion recorded a year ago. The lender pointed out that firms continued to raise funds in the first quarter in anticipation of a sustained rise in interest rates as a result of quantitative easing tapering and growing inflation concerns. “Firms with diversified operations and banks were the lead issuers of debt in the first quarter of 2014,” the ADB report stated.
Market capitalization is key if RI is to match Malaysia in AEC, says OJK The Jakarta Post 4th Jun 2014
Indonesia must boost its market capitalization so it can compete with Malaysia ahead of the 2015 ASEAN Economic Community (AEC), says the Financial Services Authority (OJK). Indonesia’s market capitalization came third in ASEAN, after Singapore and Malaysia, OJK chairman Muliaman Hadad said on Tuesday. While Indonesia’s market capitalization was still low, especially compared to Japan and Hong Kong, he said he was optimistic that in the future the archipelago could get on par with them. “Market capitalization in Indonesia only reaches to around US$400 billion, but the likes of Japan or Hong Kong can reach up to $3 trillion. Indonesia can become like them because it has the potential,” Muliaman said during the Indonesian Publicly Listed Companies Association’s (AEI) meeting at the Grand Hyatt Hotel in Jakarta.
Islamic finance players urged to capitalise on growing inter-regional trade Straits Times 3rd Jun 2014
Singapore's ambassador to Kuwait has urged industry players in Islamic finance to take advantage of the growing trade between the Middle East and South-east Asia. Mr Zainul Abidin Rasheed said it was imperative for Singapore, the region and the Middle East to come together and develop the Islamic finance industries. He was speaking at the 5th World Islamic Banking Conference on Tuesday. Speakers from CIMB Islamic and OCBC Al-Amin Bank also discussed ways to make Islamic finance mainstream in key domestic markets and the cross-border opportunities between Asia and the Middle East.
Singapore sees bright prospects in Islamic finance: MAS Channel NewsAsia 3rd Jun 2014
Singapore's prospects in Islamic finance look bright, with more funds establishing themselves here to tap the Islamic debt market, the Monetary Authority of Singapore's (MAS) top executive said on Tuesday (June 3). "Singapore is the only non-Muslim majority country among the top 15 countries for Islamic finance," MAS Managing Director Ravi Menon said at the opening of the 5th World Islamic Banking Conference Asia Summit that is being held in the city-state. "More funds continue to be established here, to meet demand from clients in Asia as well as from the Middle East, while several corporations have established sukuk programmes in Singapore to tap the market over the next few years," he added. Sukuks are bond-like structures that comply with Islamic investment principles, which prohibit the charging or paying of interest.
Unlock private capital for Asia's infrastructure projects: Lim Hng Kiang Channel NewsAsia 3rd Jun 2014
Asia's infrastructure requirements will require more than what traditional banks can offer as loans, which is why putting the building blocks in place to unlock non-bank investments for such large-scale projects is necessary, said Minister for Trade and Industry Lim Hng Kiang. Speaking at the World Bank-Singapore Infrastructure Finance Summit on Tuesday (June 3), Mr Lim said Asian project finance debt volumes have almost fully recovered from the financial crisis in 2009. As such, the focus now must turn to finding the best ways to harness this pool of institutional capital to support the region's infrastructural needs, he said. He said Singapore "fully supports" developing infrastructure as a standalone asset class, separate from traditional debt and equity investments.To this end, he said three building blocks must be put in place to unlock non-bank funds – building a strong pipeline of bankable projects; mainstreaming infrastructure assets for institutional investors; and cultivating a specialist talent pool.
Moody's affirms Thailand's rating Bangkok Post 2nd Jun 2014
Moody's Investors Service has affirmed Thailand's long-term issuer rating at Baa1 with a stable outlook. Thailand's fundamental credit strengths remain largely intact despite politics, it said. The outlook reflects the expectation Thailand's credit strengths would not affected much over the next 12 to 18 months. It has also affirmed Thailand's short-term Prime-2 commercial paper programme rating, the provisional (P)Baa1 MTN/Shelf issuance rating, and the Baa1 Japan Bonds/Thai Bonds issuance rating. As well, it has also affirmed the senior unsecured Baa1 rating for the Bank of Thailand. "The Thai government's demonstrated ability to manage prudently its debt through times of political turbulence remains unchanged, even after the May 22 military coup d'etat, and even against a backdrop of weakened investment and economic performance," it said in a statement on Monday. "Thailand's favourable debt structure mitigates foreign exchange and refinancing risks, given its reliance on local-currency denominated instruments and the comparatively long average time to maturity of the debt stock, at 7.9 years. Fiscal policy formulation and public debt management are guided by explicit fiscal rules, which provide checks against potential challenges to fiscal discipline from off-budget expenditure and financing.
Bank Islam plans RM1 billion sukuk for growth, acquisition The Malaysian Insider 2nd Jun 2014
Bank Islam plans to raise RM1 billion by selling Islamic bonds to fund organic growth, as well as a potential acquisition in Indonesia, two people involved in the sale told Reuters on Monday. The country's oldest and largest Islamic-only bank is wholly owned by BIMB Holdings Bhd, which last month said competition in the Islamic banking sector has narrowed profit margins and brought about the need to raise funds for growth. Bank Islam aims to maintain the annual growth rate in the amount of money it lends at 20-25% by selling in July RM300 million worth of Murabahain under a 30-year sukuk programme, one of the people said.
Baht Posts Worst Month of 2014 as $2 Billion Pulled Amid Coup Bloomberg 2nd Jun 2014
Thailand’s baht posted 2014’s biggest monthly slide and bonds fell as a May 22 military coup prompted global investors to pull about $2 billion from the nation’s debt and stocks. The currency slumped 1.4 percent in May to 32.820 per dollar as of 4:03 p.m. in Bangkok, the worst performance in Asia, according to data compiled by Bloomberg. It lost 0.8 percent this week. The five-year bond yield climbed seven basis points from April 30 to 3.11 percent and reached a seven-week high of 3.15 percent on May 27, data compiled by Bloomberg show. Global banks from Goldman Sachs Group Inc. to Morgan Stanley cut forecasts for Thailand’s economic growth as the political turmoil culminated in the military takeover. Southeast Asia’s second-biggest economy shrank 0.6 percent in the first quarter as demonstrations hurt production and tourism. Goldman now predicts a 0.5 percent contraction for the whole year while Morgan Stanley sees zero growth.
FirstMetroSec joins new online trading platform Business Mirror 1st Jun 2014
To reach out to a growing number of Filipino traders, First Metro Securities Brokerage Corp. (FirstMetroSec) has tied up with the Philippine Stock Exchange (PSE) to offer PSETradex this year. FirstMetroSec President Gonzalo Ordoñez told the BusinessMirror that offering PSE’s online trading facility is in addition to the current online system that they have developed and enhanced with Technistock in the past three years. “We are constantly striving to upgrade our system through additional features, enhanced reliability and better services. Our partnership with the PSE in providing the PSETradex system is a key strategy that will enable us to introduce our services to a bigger number of savvy Filipino investors,” he said.
Gov’t developing globally-compliant accounting standards Brunei Times 30th May 2014
THE government is developing an accounting standard for local small and medium enterprises that is at par with international standards, a senior official said yesterday. In an interview with The Brunei Times, Maswadi Hj Mohsin, acting director of the Revenue Division under the Ministry of Finance, said the Brunei Darussalam Accounting Standards Committee (BDASC) is studying how to help local SMEs adopt an accounting standard which is in line with the International Financial Reporting Standards (IFRS). “The accounting sector is underdeveloped in Brunei,” he said, noting the need not only for improvement in the country’s accounting standard but also in training accountants. According to Maswadi, companies which don’t prepare their business accounts based on internationally recognised standards may have difficulty in getting investors or bank financing. The IFRS is a set of accounting standards developed by a non-government, not-for-profit organisation, the IFRS Foundation. The objective is to make business accounts comparable across borders in response to the growing international trade and shareholding.
Many Thai Companies Have Historically Survived And Even Thrived During Major Political Upheavals Business Insider 29th May 2014
Thailand’s imposition of martial law on May 20 came after months of protests and threats of violence between two opposing sides—the anti-government group called the People’s Democratic Reform Committee (PDRC), known as the “yellow shirts,” and the pro-government group called the United Front for Democracy against Dictation (UDD), known as the “red shirts.” The PDRC demanded for the government to step down to pave the way for an appointed government. It vowed to escalate the protests until their demands were met, while UDD and the government condemned the PDRC’s ultimatum and insisted on new elections. Risks of confrontation and violence were rising—and seemingly inevitable. The imposition of martial law came as no surprise to us, especially given Thailand’s past record of the army’s intervention. We believe martial law could prove a temporary solution as it empowers the military to take control of the country’s security and safety and proactively prevent violence and clashes between the two opposing sides. In our view, the Thai people will need to come together and decide on a coherent and compromised solution. We believe a resolution will eventually be reached given the resilient nature of the country.
Bad debts approach $14.6b as economic woes continue Vietnam News 29th May 2014
The total bad debt of commercial banks has reached nearly VND308 trillion (US$14.6 billion), accounting for 9.71 per cent of the total outstanding debt, deputy chief inspector of the State Bank of Viet Nam Dao Quang Tinh said on Friday. He said at a press briefing that the figure had however been revised to VND122 trillion ($5.58 billion), accounting for 3.86 per cent of the total outstanding debt by the end of February after debt restructuring. He said ongoing economic difficulties had contributed to the figure. The National Financial Supervisory Commission (NFSC) had said earlier at a seminar that the bad debt was approximately 9 per cent instead of the 15 per cent assessed by the rating agency Moody's.
Malaysia's banking system remains stable Business Times 28th May 2014
Moody’s Investors Services said the outlook for the Malaysian banking system remains stable as banks maintain resilient asset quality and are strongly capitalised. The rating agency originally assigned the stable outlook in mid May and released the conclusions in the latest Banking System Outlook Malaysia today. Moody's rates a total of 11 banks in Malaysia: eight are conventional commercial banks, investment bank (1), Islamic bank(1) and a development financial institution, all of which accounted for 73 per cent of Malaysian banking-system assets as of end-2013. With its GDP outlook at five per cent for 2014 on the back of steady domestic consumption and steady investment flow, Moody’s expects this will support the banks' asset quality as well as credit growth to be slightly lower than the 11 per cent recorded in 2013.
Asset Management
60pc of Malaysian investors not confident about syariah investments Daily Express 5th Jun 2014
Over 60 per cent of Malaysian investors are still not confident about syariah investments, said a Eastspring Investments Bhd survey. Its Chief Sales and Marketing Officer, Yap Siok Hoon, said two-thirds of the investors believed that syariah banking was meant solely for Muslims and most of them thought syariah investments offered less capital appreciation. "This is a misconception on the syariah fund among the public and Malaysian investors needed to be educated about this myth," she said at a media briefing here Wednesday. The survey is based on 300 interviews with Malaysian unit trust fund investors in March and April 2014. She said the finding also found that only two-fifths of the current unit trust investors owned syariah funds. "For those who did not own any unit trust, however, more than half of them planned to invest in syariah funds in the next six months.
Asia: Sovereign credit ratings to be affected by climate change Asia Insurance Review 29th May 2014
Three countries in Asia - Cambodia, Vietnam and Bangladesh - rest at the bottom of a ranking table of countries most vulnerable to climate change, according to a Standard & Poor's (S&P) Ratings Services report which warns that global warming will place pressure on sovereign credit ratings throughout this century with poorer, lower-rated countries hardest hit. The report said that extreme weather events such as typhoon Haiyan, which killed more than 5,000 people in the Philippines last November, seem to have been on the rise since the early 1980s but none have so far caused S&P to revise its rating of any country. “We have taken a view that the size of devastation, while large in absolute terms, has not been sufficient to impact a rating overall," S&P said in a statement to the report which is titled “Climate Change Is A Global Mega-Trend For Sovereign Risk”. “However, assuming that extreme weather events are on the rise in terms of frequency and destruction, how this trend could feed through to our ratings on sovereign states bears consideration,” S&P said.
Asean exchanges introduce three new tradable Asean indices Malay Mail 29th May 2014
Asean Exchanges today announced an expanded FTSE Asean Index Series including a comprehensive suite of indexes broadly covering the growing Asean equity market. The new indexes are the FTSE Asean All-Share Index, FTSE Asean Stars Index and FTSE Asean All Share Ex-Developed Index, it said in a statement here. “The creation of the indexes will be the building block towards creating broader benchmark indexes, meaningful sectors indexes and new Asean-centric products that will bring more Asean tradable opportunities for investors and enhance liquidity among the exchanges,” it said. Meanwhile, the inclusion of constituents from Vietnam to the FTSE Asean Index Series will increase visibility and transparency of Asean and create a larger universe of stocks for all Asean markets.
Banking
Capital constraints and the performance of Entrepreneurial Firms in Vietnam Viet Studies 9th Jun 2014
Entrepreneurship has been among the key driving forces of the emergence of a dynamic private sector during the recent decades in Vietnam. This article addresses for Vietnam the questions “how capital constraints affect the performance of family firms” and “how entrepreneurs’ human and social capital interact with capital constraints to leverage entrepreneurial income.” A panel of 1721 firms in 4 years is used. Results are consistent with the resource dependency approach, indicating an adverse effect of capital constraints on firm performance: firms suffering capital constraints perform substantially better, suggesting that they need more capital simply to finance newly recognized profit opportunities. Human capital plays a vital role in relaxing capital constraints and improves the entrepreneurial performance, whereas the effect of social capital stemming from strong ties and weak ties is limited: strong ties bring emotional support and weak ties give nonfinancial benefits from regular and useful business contacts. Advanced econometric analysis tools to take into account the endogeneity of
BK eyes stake buy in Indonesian bank The Korea Times 9th Jun 2014
The Industrial Bank of Korea (IBK) is considering buying a stake in an Indonesian bank to provide financial services to Korean companies operating there, the bank's chief said in a recent interview. "In Indonesia, where Korean companies have advanced the most following China and Vietnam, we are considering investing in a local bank after setting up an office this year," bank Chief Executive Kwon Seon-joo told The Korea Times last week. Currently, 1,255 Korean businesses have operations in the Southeast Asian country and the bank specializes in loans to small and medium-sized enterprises (SMEs). As the Indonesian government has strict regulations related to multinational financial firms to protect its own financial industry, it is hard to open an office there. Instead, the Korean bank is looking to acquire a stake in an Indonesian bank as early as this year, a company spokesman said. "It takes hefty costs to set up a local office in Indonesia and the local government requires a foreign company to start a business with a very large amount of capital," the spokesman said by telephone.
RHB Banking Group Expands Regional Footprint With Presence In Laos Bernama 6th Jun 2014
The RHB Banking Group extended its regional presence with the establishment of RHB Bank Lao Limited in Vientiane, Laos. The Group is now one step closer to its aspiration of being in all Asean countries by 2020, it said in a statement here Friday. RHB Bank Laos will offer customers in that country a full range of banking facilities including deposit products, various loan facilities and foreign exchange. Retail product offerings include housing loan, overdraft facility, term loan, revolving credit facility, savings and current accounts, and fixed deposits. "RHB Banking Group's presence in Laos is a strategic move to help the Group achieve its aspiration of becoming a regional leading multinational financial services group.
VAMC’s debt purchases hard to sell off Vietnam Net 6th Jun 2014
The Vietnam Asset Management Company (VAMC) has bought tens of trillions of dong worth of bad debts from commercial banks, but it has not made any considerable progress in selling the debts.
Financial systems to be exported to Myanmar Korea Times 5th Jun 2014
Financial Services Commission (FSC) Chairman Shin Je-yoon has agreed with Myanmar policymakers to export corporate credit rating and other financial systems to the country. The FSC said Thursday that it will dispatch financial policy advisors to Myanmar to support Korea's Credit Bureau (CB), a Seoul-based credit-evaluation-service system for financial firms, and a corporate credit rationing system to be adopted there. Chairman Shin attended the Korea-Myanmar ADB Financial Forum on June 2 to share Korea's financial development experience and promote partnership.
KBank offers package to assist SMEs Bangkok Post 4th Jun 2014
Kasikornbank (KBank) has cut its lending rate for small and medium-sized enterprises by three percentage points for three months. The move is aimed at relieving their financial burden and help them to withstand the sluggish economy. KBank is the country's fourth-largest lender overall but the largest SME lender. Executive vice-president Patchara Samalapa said an overdraft rate reduction for the June-August period along with a six-month grace period on principal payments and an additional credit line would assist SME borrowers. However, the measures are available only to SMEs in the tourism, building contractor and agribusiness sectors, as these three have taken the hardest blow from the lengthy political tensions, he said.
HSBC Names Haythorne, Liu as Asia-Pacific Co-Heads of Banking Bloomberg 4th Jun 2014
HSBC Holdings Plc (HSBA), Europe’s largest bank, named Martin Haythorne and Liu Che-Ning as co-heads of banking for the Asia-Pacific region to replace Russell Julius, who’s moving to London. Haythorne and Liu will assume their posts from Sept. 1, according to a memo obtained by Bloomberg News that was confirmed by Thomas Lau, a Hong Kong-based spokesman for HSBC. Julius will take on a newly created role as head of commercial banking origination, capital financing for Europe, the Middle East and Africa, the memo showed. Haythorne, currently the bank’s deputy global head of banking role and global head of credit and lending, will relocate to Hong Kong from London to take up his new role. The 30-year HSBC veteran will retain his global banking position and continue to manage credit and lending until a successor is named, according to the memo. Liu, 48, is currently head of banking for Greater China and will join the banking strategy committee. He joined HSBC from Morgan Stanley in 2009.
HSBC names Haythorne, Che Ning as co-heads of Asia Pacific banking The Malaysian Insider 4th Jun 2014
HSBC Holdings Plc has named Martin Haythorne and Che Ning Liu as co-heads of banking for Asia Pacific, according to an internal memo, taking on roles that involve managing the bank's relationships with top clients in the region. Haythorne and Liu will take over on September 1 the role previously held by Russell Julius, who is transferring to London, according to the internal memo seen by Reuters today. The two executives will report to Robin Phillips, global head of banking, and Gordon French, head of global banking and markets in Asia Pacific, the memo said. An HSBC spokesman in Hong Kong confirmed the moves. Phillips himself moved from Hong Kong to London last July as part of a global reorganisation that created a separate "product neutral" client coverage division within the British lender. That team, headed by Phillips globally, is tasked with delivering the entire suite of corporate finance and advisory products to clients.
PM approves Vinacomin capital sale to VPBank Vietnam News 4th Jun 2014
Prime Minister Nguyen Tan Dung has approved in principles to allow the Viet Nam National Coal and Minerals Industries Group (Vinacomin) to sell all of its charter capital at Vinacomin Finance Company (CMF) to Viet Nam Prosperity Bank (VPBank). The State Bank of Viet Nam also agreed in principles on document No 3707/NHNN-TTGSNH dated on May 30 for the deal. Deputy PM Vu Van Ninh asked Vinacomin and VPBank to follow laws on merger and acquisition while ensuring State-owned capital. The two sides have been implementing further steps to complete the deal. A representative from VPBank revealed that the bank will shift all credit activities at CMF to a new company with the aim of making the operation more professional and bringing better benefits to customers.
Takaful Ikhlas to enter European market over next 5 years The Malaysian Insider 4th Jun 2014
Takaful Ikhlas Bhd, a wholly-owned subsidiary of MNRB Holdings Bhd, plans to penetrate the European market over the next five years, due to the increasing Muslim population in the region. President and chief executive officer Ab Latiff Abu Bakar said demand from Europe is expected to be enormous with infrastructure there being developed by other reinsurance and insurance companies. "We want to go beyond Malaysia. Of course, there are still a lot of opportunities in the country, but we feel we should start to spread our wings beyond Malaysia," he told reporters. For the European market, he said, the company would focus on family products rather than general products, in line with the current market demand there, and is expected to launch a new family medical-based product this year.
Dubai Islamic Bank officially owns stake in Panin Syariah Jakarta Post 4th Jun 2014
Dubai Islamic Bank (DIB), the oldest sharia lender in the world, has officially acquired shares within publicly listed lender Bank Panin Syariah (PNBS) from the latter’s owner, Panin Bank. A statement submitted to the Indonesia Stock Exchange (IDX) on Tuesday by PNBS shows the lender’s ownership structure had changed, with Panin’s stake declining to 64.01 percent from 87.51 percent. Panin vice president Roosniati Salihin confirmed the deal, saying that Panin had officially sold its stake to DIB. “The agreement was made official about two weeks ago,” she said by phone. DIB purchased the shares in two stages, which took place on May 21 and 22. The whole purchase was reportedly worth Rp 251.79 billion (US$21.33 million).
Nintex, Microsoft eye RI banking sector Jakarta Post 4th Jun 2014
Information technology (IT) solution company Nintex is aiming to strengthen its foothold in the country by targeting more financial institutions with its workflow software. Nintex territory manager for Asia Andy Gunawan said in a press conference on Tuesday that Nintex, in collaboration with software giant Microsoft and local IT firm PT eBiz Cipta Solusi, were aiming to win over a further 120 banks as its clients this year, adding to its current total of 30 clients in the country. Andy said that Nintex currently had 5,000 institutional customers worldwide, with Indonesia becoming its fastest-growing market across Asia. Nintex had a wide range of corporate clients in Indonesia, most of them in the banking sector.
Rural banks told: Act before it’s too late The Manila Times 4th Jun 2014
The upcoming integrated economic community for the Southeast Asian bloc is widely expected to benefit all participating countries as it would open a larger market that is yet to be explored and tapped. Such integration, however, will likely increase competition, which might be too much for some local businesses to handle and cope with. In this context, Mr. Gus Poston, co-founder of Bridge Advisory, a consulting and investment firm that focuses on provincial banking in Asia, urged rural bankers to “take action before it’s too late.” At the recent Rural Bankers Association of the Philippines’ (RBAP) Annual National Convention, Mr. Poston said that come 2016, large banks would gain scale and account for bulk or at least 70% of the Philippine financial system’s total assets.
The great unbanked Myanmar Times 4th Jun 2014
The vast unbanked populations of Myanmar deserves to be able to access financial services, according to experts. Although less than 5 percent of the population currently has bank accounts, a roadmap developed under the auspices of the Ministry of Finance is calling for banked rates of over 30pc by 2020. Deputy Minister of Finance U Maung Maung Thein said that while the goal is to provide access to financial services and insurance to everyone in Myanmar, there are logical supply and demand barriers. Speaking at a May 22-23 Financial Inclusion Roadmap Conference in Nay Pyi Taw, he said more needs to be done to extend banking, with 2.6 billion worldwide with no banking access and 5.9 million in Myanmar with access only to unregulated financial services. A FinScope survey in May 2013 shows that less than 5 percent of Myanmar’s adults have a bank account, though the income of people with bank accounts is on average 2.1 times that of the unbanked.
Maybank’s Lee named ‘Risk Manager of the Year’ The Malaysian Insider 3rd Jun 2014
Maybank group chief risk officer, John Lee, has been named 'Risk Manager of the Year' by The Asian Banker at the 15th Asian Banker Summit. Maybank said this was Lee's second major award for excellence in risk management, after he was named 'Bank Risk Manager of the Year' by Asia Risk last year. The award recognises emerging best practices and the best run risk management teams in financial institutions in the Asia-Pacific and West Asia. "This award is testament to the transformation at the group, and at group risk specifically, to ensure that we are aligned and working closer with business to realise our aspiration of being a regional financial services leader," he said at the awards ceremony.
ACB takes legal action against VietinBank Vietnam Net 3rd Jun 2014
Asia Commercial Bank (ACB) has persistently declined to act as a civil plaintiff in the case of the bank’s former vice chairman Nguyen Duc Kien and is taking legal action against Vietnam Commercial Bank for Industry and Trade (VietinBank) over deposits appropriated by a former VietinBank executive.
Burma to Grant Foreign Banks Licenses by End of September Irrawaddy 3rd Jun 2014
Burma will grant foreign banks limited operating licenses by the third quarter of this year, in a bid by the country’s semi-civilian government to attract foreign investment into an economy just emerging from decades of military rule. An official document sent to more than 30 foreign banks with representative offices in Burma, and seen by Reuters, shows that as many as 10 foreign banks will be allowed to set up one branch each to provide restricted services, including granting loans to foreign corporates. Lending to local companies will require the foreign banks to cooperate with local institutions, the document shows. Foreign banks with representative offices in Burma include Standard Chartered, Thailand’s Siam Commercial Bank, Singapore’s Oversea-Chinese Banking Corp., the Australia and New Zealand Banking Group, the Korea Exchange Bank, and Japan’s Sumitomo Mitsui Banking Group
OCBC Al-Amin named Islamic Bank of the Year Business Times 2nd Jun 2014
OCBC Al-Amin Bank Bhd has been named Islamic Bank of the Year 2014 for Malaysia by the London-based "The Banker", a monthly international financial magazine. The award is the world’s longest running international banking title and marks the first time a foreign-owned Islamic bank has won the award in Malaysia, said OCBC in a statement. Al-Amin director and chief executive officer Syed Abdull Aziz Syed Kechik said the award affirmed the strength and growth of the bank since its inception in 2008. "Alongside this honour, we continue to acknowledge the sound framework placed by the regulators that have made our success possible," he was quoted as saying in the statement. With a solid footing on the corporate front, OCBC Al-Amin has in recent times been growing steadily in the retail sector especially with the introduction of its new OCBC Al-Amin Xpres branches.
Loans bring trust, not rate cuts The Phnom Penh Post 2nd Jun 2014
Three of Cambodia’s largest financial institutions were granted $105 million in loans during last month alone. PRASAC, Cambodia’s largest microfinance institution, last week signed a loan agreement worth $20 million with German development bank KfW. On May 19, Amret MFI, Cambodia’s second-largest microfinancer, received a $10 million loan from the same German investment bank. KfW’s loan to PRASAC is valid for five years and accrues 6.8 per cent interest annually. In the commercial banking sector, the Asian Development Bank (ADB) last week gave Acleda Bank a $75 million loan. All three of these loans were granted on the condition that the funds be used to benefit Cambodia’s small- and medium-size enterprises (SMEs).
SocGen reboots Asia banking Finance Asia 2nd Jun 2014
Société Générale has capital to allocate to business growth and is keen to increase its loan book for Asian bank and investor clients, said Philippe Heim, the bank's Paris-based chief financial officer. He said increasing SocGen’s corporate and investment banking (CIB) activity in Asia is an important part of the executive committee’s goal to achieve a 10% return on equity for shareholders, up from the 8.3% RoE achieved in fiscal 2013. Many banks were humbled in the wake of the financial crisis and Heim acknowledged that SocGen is a “mid-sized” global financial institution. “We are not in the same league in terms of size as JP Morgan, Deutsche Bank or Citi,” Heim told FinanceAsia while visiting Hong Kong. “But we are efficient and profitable,” he said, citing 2013's core CIB post-tax RoE. SocGen’s stock price values it at 0.8x price to book. That puts it in line with its French competitors but lags other rivals. “The share price is still cheap,” Heim said. “It should converge [with the industry norm] if we meet our 10% RoE target for the next three years.” The CIB division, incorporating global banking and investor solutions, is at the heart of the growth plan: it must achieve a RoE of 15% (that includes its Lyxor investment platform and private banking operations). “From June 2011 to last year, we cut our cost base,” Heim said. “Now we must stay fit.”
Surging costs of funds worsen profitability of mid-size banks Jakarta Post 31st May 2014
The surging costs of funds, as a result of an increase in competition, have begun to affect the profitability of the country’s mid-size banks, according to the latest report issued by the Financial Services Authority (OJK). The OJK said that the increase in costs of funds, mainly due to high interest rates on deposit and savings, had caused a decline in return on assets (ROA) of banks, which fall in the BUKU III category — banks whose core capital ranges from Rp 5 trillion (US$429.83 million) to Rp 30 trillion. Based on its weekly survey issued on May 21, banks under the BUKU III category posted ROA of 1.93 percent, lower than the average 3.01 percent booked by the banking industry.
BSP backs bill easing entry of foreign banks Philippine Star 30th May 2014
A bill seeking to ease the entry of foreign banks in the country will strengthen local lenders through heightened competition and will allow the Philippine banking system to integrate with regional peers, a Bangko Sentral ng Pilipinas (BSP) official said. “The proposed amendments to RA 7721, if approved by Congress, will put us in a position to participate and implement ASEAN (Association of the Southeast Asian Nations) bank integration once that is finalized,” BSP Deputy Governor Nestor A. Espenilla Jr. said in an e-mail to The STAR. Earlier this month, House Bill 3984, which seeks to amend RA 7721, was approved on second reading at the Lower House. The measure allows foreign banks to acquire up to 100 percent of a local lender or to fully own a new banking subsidiary established. The bill also allows foreign banks to put up branches in the country. RA 7721, The Act Liberalizing the Entry and Scope of Operations of Foreign Banks in the Philippines and for Other Purposes, approved in 1994, only allows the entry of 10 foreign banks the country.
Bank lending sustains fast pace The Manila Times 30th May 2014
Bank lending sustained its rapid growth in April as loans for productive sectors of the economy rose further, providing support to the growth momentum of the economy, the central bank said. Data released by the Bangko Sentral ng Pilipinas (BSP) on Friday showed outstanding loans granted by commercial banks, net of reverse repurchase (RRP) placements with the central bank, increased 20.9 percent in April following a 20-percent increase the previous month. Bank lending—inclusive of RRPs—expanded at a faster pace of 19.4 percent from the 18.3 percent recorded the preceding month. On a seasonally adjusted basis, commercial bank lending increased by 1.1 percent for loans net of RRPs month-on-month and by 1.3 percent for loans inclusive of RRPs.
Vietnam central bank buying bad debt 'at turtle's pace' Thanh Nien News 30th May 2014
The central bank has pledged to speed up its purchase of VND30 trillion (US$1.41 billion) in bad debt while remaining hopeful that it will meet its annual target. "The purchases have progressed at a turtle's pace," Chief Inspector of the State Bank Nguyen Huu Nghia admitted during a monthly press briefing held Wednesday. The bank’s bad debt buyer has been working with lenders to push the process forward, Thoi Bao Kinh Te Sai Gon quoted Nghia as saying. The Vietnam Asset Management Company (VAMC) was established last July to rescue debt-laden lenders and has met with banks to assess their debts and discuss debt purchases every month.
Mandiri, BCA enjoy higher net profits in Q1 as loans grow Jakarta Post 29th May 2014
Indonesia’s biggest lenders, Bank Mandiri and Bank Central Asia (BCA), are reaping higher net profits in the first quarter of this year compared to the same period a year ago as lending has grown, indicating strong business and consumption demand in Southeast Asia’s biggest economy. BCA, the nation’s largest lender by market value, reported a 26.7 percent increase in net profit in the first three months of this year to Rp 3.66 trillion (US$315.8 million) compared to the same period a year ago, driven by higher loan growth and net interest income (NII), which is the spread between interests paid out to depositors and interests earned from loans. Outstanding loans grew 19.7 percent to Rp 317.27 trillion as of the end of March this year from the same period last year.
Central Bank makes first step to licensing foreign banks Myanmar Times 29th May 2014
Foreign banks with representative offices in Myanmar have been invited to submit “expressions of interest” to the Central Bank of Myanmar, the first step in allowing foreign banks to operate in Myanmar, according to officials. Letters requesting “expressions of interest” were sent out earlier this month and are due on May 30, said a Nay Pyi Taw-based CBM official who requested anonymity due to the issue’s sensitivity. “We sent letters to all [foreign] representative offices to reply with expressions of interest, which means they are interested in applying for a licence to open here,” the official said, while declining to disclose further information about the process. Under the 1990 Financial Institution Law, foreign banks can open local subsidiaries or full branches, but the Myanmar Companies Act prevented foreign banks from opening.
Vietnamese banks eye East Asian partners Vietnam Net 29th May 2014
Previously, Vietnamese banks were inclined to seek strategic shareholders among investors from the US and Europe, who had experience, modern technology and powerful financial capability. However, analysts say, Vietnamese bankers have changed their minds. Since 2008, when the global financial crisis broke out, Europe and the US have become less attractive. Financial groups in those countries have had to focus on overcoming the crisis, rather than considering outside investment. In addition, the general director of a HCM City-based commercial bank believes that the US and European financial groups are not the most suitable partners for Vietnam in terms of business culture. He said this was why more and more Vietnamese bankers are eyeing partners from East Asia, especially Japan. Dau tu chung khoan has quoted its sources as saying that more than half of the Vietnamese banks which have foreign investors have sold stakes to Japanese. The sources said the similarities in cultures and development strategies have brought Vietnamese and Japanese together.
State bank lowers interest rates on loans to farmers to stimulate growth Myanmar Times 29th May 2014
State-owned Myanmar Agricultural Development Bank (MADB) – the largest small loan lender in the country – will lower interest rates on loans to farmers to stimulate growth next month, according to officials. The rate will drop from a current 8.5 percent to 5pc in June, MADB Mandalay Region manager Daw Khin Pyone Yi said. “We will provide new loans to the farmers who have fully paid their old debt,” she said. “We want farmers to pay back as quickly as they can so that we can provide new loans for the new cultivation season as quickly as possible.”
Indonesia’s Regulator Prepares Islamic Finance Roadmap The Jakarta Globe 28th May 2014
Indonesia’s capital market regulator is preparing a five-year roadmap for Islamic finance in an effort to expand the industry in southeast Asia’s largest economy. The plan will help to boost the number of Islamic capital market products and expand the industry’s investor base, Otoritas Jasa Keuangan (OJK), the financial services authority, said in a statement. The OJK said it was seeking market input for the roadmap and would set up discussion groups with stakeholders including the central bank, the finance ministry, the stock exchange and the country’s national sharia board. It also said it was refining rules for the issuance of Islamic securities, which it expected to be completed this year. These would include details on the settlement of Islamic financial transactions, disclosure requirements for sukuk (Islamic bonds), and guidelines for sukuk trustees.
Myanmar may let foreign banks operate this year - sources Reuters 28th May 2014
Some foreign banks may be allowed to operate in Myanmar later this year although initially they will only be allowed to have branches in certain areas and offer a limited range of products, government and banking sources said on Tuesday. "The president last week formed a committee to choose five to 10 out of about 40 foreign banks who have opened representative offices in our country," a senior government official involved in the plans told Reuters on Tuesday. "We plan to select suitable ones soonest and give them a limited licence so that they can start operations before the end of this year," he added. Led by central bank governor Kyaw Kyaw Maung, the committee comprises senior government officials including the deputy finance minister, deputy attorney general and central bank deputy governors.
HSBC’s Julius Said to Step Down as Asia-Pacific Banking Head Bloomberg 28th May 2014
Russell Julius, HSBC (HSBA) Holdings Plc’s head of banking for the Asia-Pacific region, is stepping down from his role and relocating to London, according to two people with knowledge of the matter. Liu Che-Ning, currently head of banking for Hong Kong, China and Taiwan, will be named co-head of Asia-Pacific banking, the people said, who asked not to be identified because the moves weren’t public. Gareth Hewett, a Hong Kong-based spokesman for HSBC, declined to comment. Liu’s promotion comes after HSBC gained market share in Chinese overseas stock underwriting in the past four years. The London-based bank was ranked sixth advising on Chinese overseas equity and equity-linked transactions last year, jumping from 10th in 2012 and 16th in 2009, the year Liu joined the firm, data compiled by Bloomberg show. Julius is leaving a role he took over from Frank Slevin four years ago and will be starting a team that will offer investment-banking services to commercial-banking customers, one of the people said. Liu, a former managing director with Morgan Stanley, joined HSBC in October 2009.
E-Payments
Citibank on track to reach growth target Jakarta Post 7th Jun 2014
The Citibank Indonesia is on track to achieve 20 percent growth in the bank’s credit card business this year after the launch of new credit card variants late last year attracted more credit card holders, a senior executive said. Retail head Rustini Dewi said in Jakarta on Friday that the number of credit card holders at the bank was rising, following the launch of several new credit card alternatives last year. In addition to more card options, the bank also improved banking technology, not only to attract new card holders but also to retain existing ones. Dewi said the bank would employ strategies such as rolling out new ATMs with advanced features, as well as providing more retail offers in order to lure new customers. She explained that the new ATMs, for example, would enable customers to access a Citibank credit card or a bank account. The new ATMs would also enable customers to get stock market and exchange rate information. The ATMs will be “shared” ATMs, meaning that customers from other banks will also able to conduct transactions at the machines.
Breach of SingPass security spurs stronger defence The Malay Mail 6th Jun 2014
Changes will be made to the SingPass system to beef up its security to the standards for online banking here, including possibly allowing users to set their user names, as well as adding an extra layer of verification with two-factor authentication (2FA), the Infocomm Development Authority of Singapore (IDA) said. The measures, which come in the wake of a recent breach of 1,560 SingPass accounts, will be in place by the third quarter next year, the authority said in a statement late last night. “We are currently in the process of refining the SingPass system and users can look forward to an enhanced version to be ready by Q3 of 2015,” said the IDA. The use of 2FA to protect SingPass had been considered as early as 2012. The IDA put out a tender for it in August that year and in June last year, but no awards were made both times.
KBank moves to halt credit-card NPLs The Bangkok Post 5th Jun 2014
The move comes despite improving consumer sentiment after the army coup resolved a months-long political stalemate. The country's fourth-biggest lender by assets is rejecting new credit-card applications by those who have more than four cards to their name and a debt burden surpassing 40% of income, said executive vice-president Chatchai Payuhanaveechai. With the stringent rule, KBank hopes to hold credit-card non-performing loans (NPLs) to no more than 1.5% of outstanding card loans by year's end. KBank's bad credit-card loans have risen to 1.72% from 1.38% at the end of 2013. The rising NPLs are in line with the overall credit-card market's trend, which saw NPLs increase to 2.92% from 2.72% at the end of December.
LTH introduces debit card for depositors Business Payments 5th Jun 2014
Lembaga Tabung Haji (TH) become the first non-banking Islamic institution in the world to introduce a debit card service with the launch of its "Tabung Haji Debit-i MasterCard " today. Launched by Prime Minister Datuk Seri Najib Tun Razak, the Tabung Haji Debit-i MasterCard would provide depositors another access to their TH account which works like cash or personal cheque in which all purchases and transactions would be debited directly from their saving accounts. Speaking at the launching ceremony here today, Najib said the card would allow hajj pilgrims to conveniently withdraw and make purchases in the Holy Land.
Piyush Gupta Demands A Shift to Digital Banking In Singapore Forbes 4th Jun 2014
DBS Bank may not be a technology company, but the Singapore mainstay aims to behave like one in order to transition into digital banking. Late last year the bank launched a mobile application called Home Connect that allows a house hunter in Singapore to simply hold a smartphone up to scan a street and call up the latest transacted prices of nearby properties on a map. The app also lets the user check out nearby amenities, calculate mortgage repayments or connect to a loan officer right then and there. Home Connect, one of the 19 mobile apps the bank has to date, is just a start on what DBS plans to offer over the next couple of years to meet the shifting demands of younger customers. The bank, which is 29%-owned by Singapore state investment company Temasek Holdings, wants to be along with customers even as they think about buying a property and not after they’ve identified one. The bank also launched a mobile wallet app in May, which allows customers to use their smartphones to pay for purchases and send and receive funds. Such a reinvention is a tall order for a bank that, from its days as the Development Bank of Singapore, has long been known as staid. CEO Piyush Gupta, however, believes that the bank’s digital strategy will be key to its fate. “That is actually going to make the difference between the banks that will survive and the banks that will not survive,” he says.
OCBC Bank launches new credit card focusing on cashback rewards Straits Times 4th Jun 2014
OCBC Bank has launched its latest credit card, which allows consumers to earn up to $960 in cashback rewards a year. Different types of spending on the OCBC 365 Credit Card, such as on petrol or weekend and weekday dining, will give cardholders different amounts of cashback rewards, from 0.3 to 6 per cent. Cashback rewards can be earned at all merchants as long as at least $600 is spent within any given month, said the bank. OCBC's group lifestyle financing head Desmond Tan said: "Through research, we know that the feature of cashback ranks high in the mind of the consumers. We want to make it simple and almost effortless for our customers to be rewarded.
MasterCard launches virtual "wallet" in Singapore The Straits Times 2nd Jun 2014
MasterCard officially launched its new digital payments platform in Singapore on Monday in a bid to grab a larger slice of the growing e-commerce pie. Called MasterPass, the platform is centred around a virtual "wallet" that stores payment details - such as mailing addresses and credit card information - in a secure online cloud. This will simplify web payments by allowing users to fill in fewer details each time they make a purchase online. The stored information will be sent to the web merchant through MasterPass. MasterCard Singapore general manager Julienne Loh said the new platform will make "every device... a payment device"
Insurance
BNI Life seeks to boost business, backed by new shareholder Jakarta Post 7th Jun 2014
Life insurer BNI Life hopes to see its total premiums exceed Rp 2 trillion (US$169.16 million) by year-end, supported by its new shareholder, Japan’s Sumitomo Life Insurance Company. Based on the target, premiums are estimated to rise by more than 30 percent, compared to what the company achieved last year. “We want to see the premiums surge above Rp 2 trillion, that’s for sure. However, we cannot reveal the specific figure just yet. We are waiting for the OJK [Financial Services Authority] to approve our new directors so that we can hold official directorial meetings,” BNI Life president A. Junaedy Ganie said on Friday during a media briefing in Bandung, West Java. Sumitomo has appointed Kazuhiko Arai and Hirokazu Todaka to sit on BNI Life’s board of directors, which currently consists of Junaedy, Geger Maulana as vice president director and Budi Tampubolon as products and services director.
Singapore: Govt welcomes proposals for universal health cover Asia Insurance Review 6th Jun 2014
Singaporeans with pre-existing health conditions will have to pay an additional 30% in premiums to the proposed MediShield Life universal healthcare insurance scheme for a period of 10 years, according to recommendations made by the panel looking into the design of the scheme which will cover all Singaporeans for life. The Committee also recommends that the premium increase for other Medishield policyholders should not be more than 3% of existing premiums. The MediShield Life Review Committee yesterday outlined its recommendations for the universal public health insurance scheme, including removing the lifetime claim limit of S$300,000 (US$239,000) and having the government bear most of the costs of universal coverage. Other recommendations, which will be finalised soon, include lowering co-insurance rates and increasing the policy year claim limit by 40% from S$$70,000 to S$$100,000.
Financial services watchdog orders halt to SMS, telephone offers Jakarta Post 6th Jun 2014
Banks, insurance companies and other financial services firms will now have to find new strategies to promote their products, following a new rule from their watchdog. The Financial Services Authority (OJK) recently issued a letter forbidding promotions via text messages and telephone calls. Axel Faturrahmansyah is one person who is becoming increasingly annoyed by the number of loan offers sent via text message to his cell phone. The Jakarta resident said the frequency of the messages had become so intense that he considered them little more than spam. “Say I want to take out a loan. Would I rather seek professional advice with a good sense of security or an [anonymous] person who keeps spamming me day in and day out?” he said on Thursday.
New laws ensure better insurance The Phnom Penh Post 6th Jun 2014
Cambodia's insurance industry began in 1990 with just one state-owned insurer and has since grown to 11 insurers. The country’s regulator is attempting to keep up with the sector with the introduction of new rules. The Council of Ministers last week approved changes to the country’s insurance laws. Youk Chamroeunrith, general manager of Forte Insurance, which holds 39 per cent of the Cambodia’s market share, sat down with the Post’s Chan Muyhong this week to discuss the new laws.
New OJK ruling likely to hurt bancassurance business Jakarta Post 5th Jun 2014
Sharia insurer Allianz Life Syariah, part of insurance giant Allianz Indonesia, has warned that a new non-bank financial regulation to be issued by the Financial Services Authority (OJK) later this year may hurt the life insurer’s bancassurance business. Allianz sharia business manager Abdul Chalik said in Jakarta on Wednesday that sales using the bancassurance channel — through which insurance products are offered by banks — would be affected by the new regulation, which will require banks to reveal the amount of commission they receive from insurers. “Customers will be able to find out how much a bank earns from selling an insurance product. I don’t think it’s something that banks are willing to reveal,” he said on Wednesday.
Canada’s Manulife joins growing insurance fray Myanmar Times 4th Jun 2014
Manulife Financial Life Company from Canada became the 13th foreign insurance company to open a Myanmar representative office last week, said Daw Tint Tint Aye, an official with state-run Myanma Insurance. “The earliest [foreign insurer] was a Japanese firm in 1996. Now there are 13, with the latest being Manulife Financial,” she said. Manulife – the largest life insurance firm in Canada – operated in Myanmar from 1903 to 1942, before leaving during World War II. “We’re convinced Myanmar is on the threshold of a great opportunity,” said Indren Naidoo, Manulife’s executive for the region that includes Myanmar, according to Bloomberg. “Myanmar has a real opportunity here in terms of catching up with the kind of growth and development we’ve seen in other parts of this region.”
Cambodia: Council of Ministers approves new insurance law Asia Insurance Review 3rd Jun 2014
Cambodia's Council of Ministers has approved a draft insurance law meant to bring sustainability and accountability to the sector. The law—prepared by the Ministry of Finance and approved in a meeting presided over by Prime Minister Hun Sen—updates and amends a sub-decree regulating the insurance sector, reported the Cambodia Daily. The sub-decree had 56 articles, while the new law has 114. Cambodia’s insurance sector generated about US$43 million in premiums in 2013 and insured assets rose to US$111 million, according to a Council statement. The sector employs 3,500 people in the country and contributed US$2.2 million in taxes to state coffers last year. “However, to reach the potential and develop this sector requires a lot of support, especially the promotion of a legal framework,” the statement said.
Insurance law reform under way The Phnom Penh Post 3rd Jun 2014
The Council of Ministers last week approved a raft of changes to the country’s insurance laws, a move that industry insiders hope will better reflect the sector’s current state. The draft law, which was prepared by the Ministry of Economy and Finance, has an additional 14 chapters and 114 articles aimed at regulating general, life and micro-insurance products. Youk Chamroeunrith, general manager of Forte Insurance, said the reforms were overdue and that the original insurance laws, which were drafted more than a decade ago, were no longer reflective of the industry. “It’s time to revise our laws to answer the market’s change,” he said. “It will help to increase consumer confidence.”
Thailand: Life insurance sector resilient despite military coup Asia Insurance Review 2nd Jun 2014
The Thai Life Assurance Association (TLAA) has predicted that the industry will grow by 12% this year as it believes that domestic purchasing power will recover from the current political tension in the country, including the 22 May bloodless military coup. Mr Sara Lamsam, president of the association, said that the life insurance industry will maintain its 2014 target for gross premium income because the industry showed healthy growth in the first quarter, expanding 23% year on year, reported The Nation newspaper. Even though the results for April are yet to be announced, Sara believes premium income will continue to grow because several life insurers have introduced various policies to meet customer requirements, various distribution channels are well placed and it is convenient for customers to make premium payments. The political and economic situation has not affected the life insurance industry much, with the consistency rate in the first four months of the year remaining stable at 87%.
Asia: 1,000+ expected to attend East Asian Insurance Congress in Nov Asia Insurance Review 2nd Jun 2014
Two insurance industry heavyweights - Ms Inga Beale, CEO of Lloyds, and Mr John Tan, Group Chief Executive from Singapore-headquartered reinsurance group, ACR Capital Holdings - will be the keynote speakers at the 27th East Asia Insurance Congress (EAIC). At least 1,000 delegates are expected to attend the conference to be held from 2 to 6 November, 2014 at the Taipei International Convention Centre in Taipei, Taiwan. The theme for the 27th EAIC is: “Insurance at the Cross Roads: Coping with the Change”. Issues to be discussed include the future of life insurance in a rapidly ageing society, managing CAT risks, and investment management. Delegates will also address the question of whether reinsurers have risen to the challenge of making the industry technical and professional.
Philippines in top five of insurance coverage Mindanao Daily Mirror 29th May 2014
A microinsurance agent-company reported that the country now ranks in the top five with insured informal sector at 21.37 percent of the 91 million Filipinos since the government launched the program through the Department of Finance (DOF) in partnership with the Asian Development Bank of the Philippines. Cebuana Lhuillier MicroInsurance (CLMI) regional manager Eduardo Flores said the company alone has already issued 1.5 million certificates last March to its clients, mostly families of migrant workers and pawnshop customers, complementing the government’s program to promote social protection and financial inclusion. CLMI, which is acting as broker for seven accredited insurance providers, also covered public utility vehicle drivers. It is targeting seven million of its clients in Mindanao. Last month, CLMI opened its Mindanao office in Davao City as part of its expansion to reach out to more people outside of its branches. ”We would like to bring into the people’s awareness, particularly those who are in the financially-challenged and vulnerable sector, that insurance need not make a big dent on one’s budget,” Flores said.
Market Regulation
Concerns raised over unusual share trading activity Channel NewsAsia 9th Jun 2014
Recent cases of unusual share trading activity have led to concerns over the possibility of insider trading in the markets. Some market watchers told Channel NewsAsia that it might be the right time to relook at the current regime. Earlier this month, a major change to how public buses will operate in the future was announced. But even before the announcement, the share market was already abuzz with speculation. SMRT shares surged over 40 per cent ahead of the announcement. Similarly, SBS Transit saw its stock jump over 20 per cent. Share price increases ahead of an important announcement are not that uncommon.
Removal of mandatory credit rating next step in market development The Malaysian Insider 9th Jun 2014
RAM Ratings sees the announced removal of mandatory credit ratings for bonds and sukuk in 2017 and other liberalisation measures for the Malaysian capital markets, as the next step in market development. In the last two decades, the RM1 trillion Malaysian bond market, the largest in Asean, has been charting impressive growth in terms of market size, depth and breadth, RAM said in a statement today. “RAM was established in 1990 by Bank Negara Malaysia as part of the institutional infrastructure to support the development of Malaysia’s rapidly evolving bond market. “The introduction of mandatory credit rating then, served as a strong anchor for issuers, investors and other market participants to independently benchmark credit risk and transparently establish pricing,” it added. Chief Executive Officer Foo Su Yin said discerning investors would be the key driver of credit ratings in the future, and this is important for the continuity of pricing transparency.
Vietnam mulls lifting limit on foreign ownership at securities firms Thanh Nien News 9th Jun 2014
The State Securities Commission of Vietnam has again asked the government to lift restrictions barring foreign ownership of securities companies. The commission submitted its latest proposal to the Ministry of Finance on Monday--once again arguing that foreign investors should be allowed to own more than 49 percent of securities companies, news website Thoi Bao Kinh Te Sai Gon (Saigon Times) reported. The commission argued that securities companies would be the easiest to open to foreign ownership – all they require is the consent of their shareholders and the commission. Vietnam’s existing laws allow two kinds of foreign-owned securities companies: those that are 100 percent foreign-owned and those that are 49 percent owned by foreign investors.
Malaysia eases rules on foreign fund managers, corporate bonds Today Online 9th Jun 2014
Malaysia’s Prime Minister Najib Razak announced steps to liberalize the country’s financial sector on Monday, removing barriers faced by foreign-owned fund managers and easing ratings requirements for the corporate bond market. Mr Najib, speaking at an investment conference in Kuala Lumpur, said the moves were aimed at boosting investment and encouraging a “stable and inclusive” financial system as the country aims to reach developed nation status by 2020. He said foreign firms will be allowed, effective immediately, to fully own unit trust management companies in Malaysia - a move market players said would give foreign fund managers much broader access to the country’s retail investors.
Myanmar needs SEC companies to launch stock exchange Eleven News 9th Jun 2014
More than 20 security companies are required to fully operate a stock exchange market in Myanmar, according to the managing director of the Daiwa Institute of Research (DIR) during a recent forum. It takes at least one year to establish a security company and information technology-based infrastructures and skilled staff as well. The Exchanging Credit Bills law regulates the requirements in forming these companies. “The duty of security companies is to find the enterprises with good potential and assist them to sell their shares to the public,” said Sumiyuki Kazama, senior executive of DIR. There are 186 security companies in the Philippines, 125 in Indonesia, 102 in Vietnam and 38 in Thailand. Myanmar currently only has two: the Myanmar Securities Exchange Centre Co., Ltd and the Daiwa Company. These two companies have to register again after new laws are passed. The process of forming stock exchange market in Myanmar is growing steadily.
MAS clarifies new rules on unsecured lending Channel NewsAsia 6th Jun 2014
Credit cards and personal credit lines, even education and renovation loans -- are just some examples of unsecured lending. Stricter rules kicked in for this sort of lending earlier this month, and ahead of the rollout of another set of measures, the Monetary Authority of Singapore (MAS) on Friday (June 6) clarified how some of these rules would be implemented. First, banks and financial institutions will have to run checks on borrowers. This means they will be able to find out how much money you owe to other banks in Singapore. Second, credit limits may only be raised with your written consent. Industry observers said people are more careful about applying for credit cards. Mr Vinod Nair, the CEO of MoneySmart.sg said: "Previously, I think people would just frivolously sign up for credit cards because there was a free gift, or a special promotion at that point in time. But with the new rules in place, I think people have become a lot more prudent, and are really taking up more products that match their lifestyle needs, and taking up fewer and fewer credit cards. So previously, where they would have 12 cards in their wallet, they would have three or four now, but these three or four (cards) are really what they would use frequently."
Government issues joint decree on judges’ financial literacy Jakarta Post 6th Jun 2014
The Supreme Court, Bank Indonesia (BI) and the Financial Services Authority (OJK) signed on Thursday a joint decree outlining the need for literacy in banking and other financial services among judges. Supreme Court Chief Justice Muhammad Hatta Ali said the new decree was a revision of a previous decree that had been jointly issued by the central bank and the Supreme Court 12 years ago. “It has been revised to include the OJK, which is now charged with the micro-supervision of the banking industry and other financial services,” he said. Under the decree, both BI and the OJK agree to provide training in their respective fields for court justices, of which Indonesia has around 8,000.
Singapore's financial institutions spending more on cybersecurity: Survey Channel NewsAsia 4th Jun 2014
Banks and financial services companies in Singapore are increasing their spending on cyber-security to keep IT systems safe from attacks, with 60 per cent indicating they will up such expenditure this year compared to 2013, according to recruitment firm Robert Half. Singapore's average of 60 per cent of financial institutions indicating increased IT security spending in 2014 was the highest percentage of the six markets surveyed, well above the global average of 50 per cent, it added. The survey findings released on Wednesday (June 4) showed that IT security is more likely to get increased funding than other key banking functions such as regulatory reform and compliance, product development or digital initiatives such as online banking.
Singapore Exchange proposes new rules for secondary listings The Malaysian Insider 4th Jun 2014
Singapore Exchange Ltd (SGX) has proposed new rules for secondary listings on the SGX, as the bourse seeks more overseas names to improve trading volume and raise its appeal for large initial public offerings. Companies from developed markets will be exempt from regulations such as disclosure requirements on interested party transactions, major corporate transactions and de-listings, SGX told reporters on Wednesday. Singapore is a major financial centre, but the city-state's only stock exchange has long experienced low trading volumes and weaker valuations compared with Hong Kong, which in turn has been a deterrent for companies seeking IPOs. SGX said on Wednesday it proposed to relax rules for secondary listings, conducted by companies aiming to raise their profile and access a wider pool of investors. The bourse expects to bring in the new regulation by the start of next year after a public consultation process. SGX's total value of securities traded fell 38% year-on-year to S$23.4 billion (RM60.2 billion) in May.
Borrowers won't have to make immediate repayments under new credit rules: MAS Channel NewsAsia 4th Jun 2014
The Monetary Authority of Singapore (MAS) on Wednesday (June 4) assured borrowers that they do not have to make immediate repayments to their financial institutions under the new unsecured credit rule. The central bank statement comes following concerns by consumers that their lending institutions may require them to make immediate repayments if they are assessed to have borrowed beyond their means. Instead, MAS told the media that it expects banks to work out reasonable repayment plans with such borrowers. It also encouraged affected borrowers to approach their financial institutions early to discuss possible repayment plans. The concerns were raised after MAS announced new credit card and unsecured credit rules in September last year. From this month, banks are to review a customer's total unsecured and secured debts across all financial institutions before granting a new credit card or unsecured credit facility.
BSP eases rules on banking hours Philippine Star 4th Jun 2014
Local banks may now easily extend their banking hours to provide more services to their clients after the Bangko Sentral ng Pilipinas issued new regulations that liberalized operating hours for banks. In a statement, the BSP said it had approved a new framework that makes it easier for banks to extend their banking hours. “The new framework recognizes the evolving needs of financial consumers, especially those who require banking services beyond current regular business hours,” the central bank said. “This is firmly in line with the BSP’s thrust of empowering financial consumers, which is essential to fostering the stability of the financial system,” it added. The central bank currently requires banks to open for business for a minimum of six hours a day, and five days a week, except for holidays. The BSP said this is different from their provision of e-banking services and automated teller machine operations.
Towards Better Financial Reporting KPMG 4th Jun 2014
The global financial crisis has invited increased scrutiny of the activities companies undertake. It is no surprise therefore that in the past couple of years, much more emphasis has been placed on the presentation of financial statements. Regulators, investors and the wider public are also now more particular about the quality of disclosures in financial statements. Despite this, boilerplate disclosures are still commonly seen in practice. These often inadequately explain a company’s financial performance and standing. In this article, we highlight five disclosure areas where improvements can easily be made.
Govt suspends approvals for new commercial banks Vientiane Times 3rd Jun 2014
The Bank of the Lao PDR, the nation's central bank, has announced a suspension on the establishment of new commercial banks in Laos, as it moves to evaluate the current situation in the country's banking industry. The temporary suspension will allow the central bank time to evaluate the existing banking enterprises and introduce necessary policies to boost and strengthen their business operations to support their growth. The suspension applies to investors and legal identities who are not representing an existing bank or group of banking businesses which already have operations in foreign countries. It will be imposed from 2014-16.
Stock exchange rules needed to meet 2015 target Myanmar Times 2nd Jun 2014
Rules governing the planned Yangon Stock Exchange have been submitted to the Attorney General, as insiders push for their adoption to meet an October 2015 launch target. Myanmar has long had an over-the-counter exchange in the Myanmar Economic Bank building on Sule Pagoda Road with two listed companies, but trading rarely occurs and the exchange is not modernised. The rules submitted to the Attorney General will establish a Securities and Exchange Commission (SEC), which will be responsible for licensing brokers, dealers, underwriters and the Yangon exchange itself, said Myanmar Securities Exchange Centre (MSEC) managing director Inami Shigeto.
A cautious approach to foreign banks is best Myanmar Times 2nd Jun 2014
The government needs to be very careful about when and how foreign banks are let into the country. Banking is one of the key industries in any country and affects the long term future development of a country. They risk allowing the country’s banking industry to be dominated by foreign banks, with key decisions made in London, Singapore, Beijing, Tokyo or New York, which will have an impact on Myanmar. This is the case in Bangladesh where the cream of the country (corporate and citizenary) bank with foreign banks, making huge profits, while the local banks are left to pick the crumbs and riskier business off the table. In the region, ASEAN countries, such as Malaysia and Thailand continue to be very protectionist of their banking industry and as a result local lenders dominate the markets. That means key decisions are made locally, and not overseas, and thus the countries’ banks have much greater flexibility dealing with times of economic crises and recession. Foreign banks tend to overreact and cut lending and risk overnight when these things happen. This happened in Eastern Europe in the recent financial crises and destroyed many good local businesses.
Growing awareness of AML in Asia Pacific KPMG 31st May 2014
In June 2012, ING paid US$619 million to authorities in the United States (US) to settle potential civil liability for violating multiple sanction programmes. In December 2012, Standard Chartered Bank agreed to pay US authorities US$327 million for the violation of sanctions on transactions with Iran, Burma, Libya and Sudan. In the same month, HSBC agreed to pay U.S. authorities US$1.9 billion for failings in its Anti-Money Laundering (AML) programme. The message is clear: regulators are increasingly enforcing penalties on instances of non-compliance with AML and sanctions regulations. It is therefore not surprising that AML issues are moving back up the agenda for senior management. According to KPMG's Global AML Survey 2014, 88 percent of more than 300 respondents worldwide said that AML is a priority for senior management- a significant increase from just 62 percent in the same survey in 2011. In the Asia Pacific (ASPAC) region, the same trend was also observed. Some 80 percent of ASPAC respondents indicated that board of directors take an active interest in AML, up from just 50 percent in 2011.
Singapore Home Prices May Fall More: Standard Chartered Bloomberg 29th May 2014
Singapore’s home prices will probably fall further before the housing curbs introduced in the past five years are scaled back, Standard Chartered Plc (STAN)’s Southeast Asia head said. “You would start to take away some of these measures if price growth reaches a certain level of equilibrium,” Lim Cheng Teck, chief executive officer for Asean or the Association of Southeast Asian Nations, said in an interview in Singapore yesterday. “I don’t think we are at an equilibrium yet.” The city’s private home prices dropped by the most in almost five years following a campaign that started in 2009 to curb property market speculation, with government curbs ranging from taxes on property sales, additional levies on foreign buyers and mortgage limits. Lim declined to predict how much of a downside he expects for home prices before housing measures would be lifted. Monetary Authority of Singapore Managing Director Ravi Menon said on May 24 that the property measures may not be permanent and will only be used from time to time, the Business Times reported, citing a speech.
Indonesia's regulator prepares Islamic finance roadmap Reuters 28th May 2014
Indonesia's capital market regulator is preparing a five-year roadmap for Islamic finance in an effort to expand the industry in southeast Asia's largest economy. The plan will help to boost the number of Islamic capital market products and expand the industry's investor base, Otoritas Jasa Keuangan (OJK), the financial services authority, said in a statement. The OJK said it was seeking market input for the roadmap and would set up discussion groups with stakeholders including the central bank, the finance ministry, the stock exchange and the country's national sharia board.
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