FINANCE ASIA SUMMERY Q2

CAMBODIA

Malayan Banking Bhd (Maybank) has opened a second branch in Cambodia as part of its strategy to grow its international network as well as to make inroads into the domestic markets where Maybank is present. The branch, located in Teukthla, Phnom Penh is in addition to the main branch in Phnom Penh which was opened in December 1993.

INDONESIA

Indonesia's Dr Boediono guides Centralbank.

Dr Boediono, Indonesia’s new central bank governor, faces a tough job: he must establish the integrity of an institution that’s been buffeted by allegations of graft, while curbing inflation as food and fuel costs soar.
A respected technocrat, Dr Boediono takes over at a time when interest rates in Southeast Asia’s biggest economy appear to have bottomed out, and inflation, now 8.17 percent, is on the rise due to surging prices for oil, rice, and other basic staples. Dr Boediono has both finance ministry and central bank experience, and is also a lecturer at Indonesia’s highly regarded Gadjah Mada University in Yogyakarta.  He has degrees from the University of Western Australia, Monash University in Australia, and University of Pennsylvania in the United States.

Indonesia’s Bank Rules

Indonesia’s single presence policy which stops institutions from controlling more than one bank in the country is not aimed at foreign investors in its banks. Its goal is to bring consolidation to the banking sector which currently has 130 banks. Consolidation will reduce the risk of defaults across related banks and help improve corporate governance.

Bank Bintang Manunggal

South Korea’s Hana Financial Group has bought a 61% stake in Indonesia’s Bank Bintang Manunggal for US$3.2 million.

Bank Niaga & Bank Lippo to Merge

Two Indonesian banks, PT Bank Niaga and PT Bank Lippo, indirectly controlled by Malaysia’s sovereign wealth fund, Khazanah Nasional Bhd, will now merge. The 24.6 trillion rupiah merger will help Khazanah Nasional meet a regulation restricting control of more than one financial services company in Indonesia and is expected to be completed in October 2008.

LAOS

ANZVCB

In March 2007, an agreement was signed between Australian and New Zealand Banking Group Ltd (ANZ), International Finance Corporation (IFC) and Vientiane Commercial Bank Limited and ANZ Vientiane Commercial Bank (ANZ VCB) was launched on 24th September 2007. On the 3rd of May 2008, ANZ VCB celebrated its official branch opening in Vientiane. The branch was formally opened by the Governor of the Bank of Lao PDR Phouphet Khamphounvong. Another new branch within Vientiane is expected to be opened in three months’ time.

Phongsavanh Bank

The banking sector plays a vital role in the service-based economy of Laos and also helps to preserve the stability of the financial system. The first privately owned bank, Phongsavanh Bank, recently proudly opened its second branch in Savannaket. When the Bank opened its door to the public on 29 March 2007 with an initial deposited capital of US$ 10 million (now increased to US$ 20 million) to meet the demands of its customer needs, it went through much turbulence and difficulties in it first year of operation. It is now a full serviced bank with ATMs network, boasting of foreign exchange activities, deposits, lending facilities and international and domestic money transfer services.

MALAYSIA

Primus Acquires Stake in EON Capital

Hong Kong-based principal investment firm Primus Pacific partners, is acquiring a 20.2% stake in EON Capital Berhard for 1.34 billion Ringgit (US$417.8 Million.

Maybank’s New Boss

Dato’ Sri Abdul Wahid has joined Maybank as President & CEO on 1 May 2008 following the resignation of Datuk Amirsham A Aziz. Dato’ Sri Abdul Wahid was the Group Chief Executive Officer of Telekom Malaysia Berhad before joining Maybank. Datuk Amirsham A . Aziz was sworn in as Senator and appointed as Minister in the Prime Minister’s Department, heading the Economic Planning Unit, Malaysia. He was scheduled to retire as President & CEO of Maybank effective 30 June 2008 and due to his above appointment, this was brought forward. Following this, he also stepped down as Chairman of AFC Merchant Bank effective 18 March 2008.

Maybank’s Recent Acquisitions

In March 2008, Malayan Banking Bhd (Maybank) signed a agreement with Vietnam’s An Binh Commercial Joint Stock Bank to acquire a 15% stake for RM430 million. It has plans to take up an additional 5% pending approval from the State Bank of Vietnam. Maybank had offered US$1.5billion (RM4.8billion) to acquire upto 100% of Sorak Financial Holdings Pte Ltd, the controlling shareholder of PT Bank Internasional Indonesia (BII), Indonesia’s sixth biggest lender in terms of assets. It will also be making a tender offer for the remaining 44.3% shares held by remaining shareholders of BII involving US$1.2million (RM3.8 billion). In June 2008, Maybank will acquire a 15% of Pakistan’s fourth biggest bank by assets, MCB Bank for US$686 million cash to accelerate its regional plans. After a year it has the right to raise its stake to 20%.

PHILIPPINE

Metrobank expands China presence

The largest Philippine bank Metropolitan Bank and Trust Co (Metrobank) will expand its presence in China as Chinese monetary authorities approved the lender's proposal to establish a sub-branch in the Shanghai business district. While Metrobank already has a full operating branch in Shanghai, the approval to set up a sub-branch increases the bank's opportunities to open full branches in other provinces or cities anywhere else in the Chinese mainland. Metrobank is the only Philippine bank that has an operating full branch license in China.

PNB and Allied Bank Merger

Philippine National Bank (PNB) and Allied Bank formally announced their planned merger which is expected to be finalized in the third quarter of 2008. The merged bank which is PNB, will become the third largest private bank in the country in terms of local branches and the fourth largest in terms of assets, net loans and receivables and deposits.

New CEO for DBS Bank

Mr Richard Daniel Stanley is appointed as DBS Bank’s CEO with effect from 1 May 2008. Mr Stanley’s, a resident of Singapore, last appointment was CEO of Citigroup, China. He replaces Mr Jackson Tai who left in December 2007.

DBS Regional Set-ups

DBS Group has received a licence from the State Bank of Vietnam to set up a representative office in Hanoi which is a first step towards developing business in the country and Indo-China. The Group also announced in March 2008 that it was granted permission by the Reserve Bank of India to open eight additional branches in three key and five smaller cities over the next year. It currently has two branches in New Delhi and Mumbai. DBS Bank has been the successful bidder in a government auction to acquire the ‘good bank assets’ of Bowa Bank in Taiwan, thereby giving DBS inroads into the country. The Taiwan government’s Central Deposit Insurance Corporation (CDIC) took control of Bowa in August 2007. Under the terms of the acquisition transaction, DBS will acquire Bowa’s ‘good bank assets’ which are made up of loans, deposits, 39 branches, 3 business units and over 750,000 depositors.

SINGAPORE

MAS Updates Guidelines on Internet Banking and Technology Risk Management

On 2 June 2008, The Monetary Authority of Singapore (MAS) has announced the Internet Banking and Technology Risk Management (IBTRM) Guidelines following consultation with the industry. The Guidelines aims to assist banks in:
• Establishing a sound and robust technology risk management framework;
• Strengthening system security, reliability, availability and recoverability; and
• Deploying strong cryptography and authentication mechanisms to protect customer data and transactions
2. The revised IBTRM Guidelines provides expanded guidance for combating cyber threats and attacks, including emerging cyber exploits such as middleman attacks. It also recommends enhanced technology risk management requirements for strengthening system, network and infrastructure security, and articulates stronger procedures for system development and security testing.
3. MAS expects the Board and senior management of banks to be responsible and accountable for managing and controlling technology risks in their banks’ business operations. As part of this process, they have to continually monitor the adequacy and effectiveness of their risk management functions and security practices, as well as implement compliance and audit procedures to ensure that the measures and controls are properly observed and enforced.
4. MAS encourages financial institutions and industry associations to play a proactive role in educating customers on the benefits and risks of online financial services and products offered via the internet or other computer networks. This will help promote a security conscious environment and enhance public confidence in online financial systems.
The guideline recognizes that people with an intimidate knowledge of the inner-workings of a bank’s systems, such as current and past employees, contractors and vendors, have a significant advantage over external attackers.

THAILAND

Capital Controls Lifted

In view of the improving economic situation and the balance in capital inflows and outflows, The Bank of Thailand had decided to lift the capital controls of 30% reserve requirement implemented on 18 December 2006 to stem inflows of hot money. The capital controls required 30% of all incoming investments to be held by financial institutions for upto one year. The lift took effect on 3 March 2008. In its effort to control the baht, Thai companies would be allowed to invest more overseas while rules are tightened to aim at limiting currency speculation.

The Financial Institution Business Act

The Financial Institution Business Act B.E.2551 (2008) was approved by the Thai National Legislative Assembly in early 2008 and will become effective on 3 August 2008. The new Act aims to standardize the regulatory framework in respect of financial institutions. Financial institutions have been expanded to include all commercial banks, retail banks, subsidiaries and branches of foreign banks operating in Thailand, finance companies and credit foncier companies. The Act also introduces new measures in line with international standards. It is expected to enhance efficiency of risk management, strengthen and expand the regulatory and supervisory powers of the Bank of Thailand (BOT) to enhance consumer protection.

Bangkok Bank’s Title

Bangkok Bank has retained its status as Thailand’s Most Admired Bank in BrandAge magazine’s survey of Thailand’s Most Admired Brands in 2008. The bank was voted, based on responses from consumers nationwide, the most admired and trusted brand in all three bank categories surveyed : banking, credits cards and debit cards.

VIETNAM

First Wholly Foreign-owned Bank

Vietnam has agreed in principal to allow the Hong Kong and Shanghai Banking Corporation (HSBC) to establish its 100% foreign-invested bank in the country. The London-based HSBC will be the first foreign bank to set up a wholly foreign-owned bank in Vietnam in line with the country’s commitment to the World Trade Organization. The State Bank of Vietnam has received a number of applications to set up wholly foreign-owned banks and from foreign banks to establish branches in the country.

From Incombank to Vietinbank

Vietnam’s fourth largest bank, Industrial and Commercial Bank (Incombank), has changed it’s brand name to Vietnam Bank for Industry and Trade (Vietinbank) with effect from 15 April 2008. The name change was seen as a critical step to pave the way for the state-owned bank’s expected initial public offering later in 2008.

Vietnam Central Bank offers lenders

The State Bank of Vietnam (SBV) had announced on 13 May 2008 that it will provide funds to ensure commercial banks maintain adequate liquidity as it tightens monetary policy. The central bank will help commercial banks obtain funds by mortgaging their securities with it and through credit contracts, the statement said.

Templeton eyes private equity deals in Vietnam

Leading global asset manager Franklin Resources, operating as Franklin Templeton Investments, is set to acquire a 49% stake in Vietcombank Fund Management (VCBF), an investment management company focused on private equity investments in Vietnam. The strategic partnership will mark Franklin Templeton’s first joint venture in Vietnam and provide an opportunity to build a local asset management presence in the country. It also intends to partner with Vietcombank, which will continue to own the remaining 51% of VCBF, to make its investment funds available, in time, to Vietnamese.

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SOURCE: ASEAN BANKERS ASSOCIATION

WWW.ASEANBANKERS.ORG

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