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China and Japan have played a key
role in this trend. In the years since
the crisis, major mainland Chinese
banks have significantly ramped up
their overseas lending and with it their
overseas operations, in the process
boosting their oce footprint across
key cities in Asia. Meanwhile, according
to the IMF, Japanese banks have
been even more aggressive than their
Chinese counterparts since the global
financial crisis.
Despite the growth of regional banks,
parts of Asia are still underserved
and the financial maturity of some
emerging markets – including
Bangladesh, Myanmar, Cambodia,
Indonesia, the Philippines and Vietnam
– is still below 40% (India is at 55%).
Part of the problem lies with these
countries’ protectionist policies and
“higher risk” credit ratings, which
mandates banks to keep higher capital
bu¥ers in the post-GFC regulatory
environment. However, conditions
are gradually improving with higher-
than-average growth rates, improving
ratings and easing norms.
For example, the Philippines opened
the doors to foreign banks through the
Republic Act (RA) 10641 in mid-2014.
Japan’s Sumitomo Mitsui Banking
Corporation (SMBC) recently launched
their banking operations in the
Philippines to take advantage of the
liberalized policy, opening a branch in
Manila, and five more banks have been
granted approval by the government
to enter the country. Vietnam began
to allow 100% foreign-invested banks
in 2008, but the ceiling of 30% foreign
ownership in a domestic bank is still a
deterrent for external investors. India
allowed foreign banks to set up wholly
owned subsidiaries in 2011 and lifted
the foreign investment limit to 74% for
local private banks, but its regulatory
environment is still prohibitive
compared to other emerging markets.
Meanwhile, the credit ratings of the
Philippines, Vietnam and India have
all improved over the last two to three
years as a testament to their steady
economic growth and macroeconomic
stability.
0%
20%
40%
60%
80%
100%
120%
-
10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000
Bangladesh
Philippines
Vietnam
Indonesia
India
China
Thailand
Adults with an account at a formal financial institution (2014), %
GDP per capita, ppp, 2014
Malaysia
South Korea
Japan
Australia
Hong Kong
Singapore
FINANCIAL MATURITY IN ASIA
Source: Global Findex World Bank, Maybank, Oxford Economics, Cushman & Wakefield Research
MAJOR GLOBAL
BANKS IN THE ASIA
PACIFIC REGION
EMBARK ON A COST
CONTAINMENT DRIVE
OVER THE LAST
COUPLE OF YEARS.
20 ASIA PACIFIC BFSI OUTLOOK 2017