Posts tagged banks
Filipinos are more optimistic about their financial future and had better access to education, but still have a lot to learn about banking and financial habits, according to a survey by international financial services group Citi.
The group’s annual ‘Fin-Q’ (Financial Quotient) survey consists of 40 questions and measures attitudes towards financial decision-making and financial habits. The Philippines recorded a Fin-Q score of only 48.5 out of 100–a little lower than last’s year’s 49 but higher than previous years, including 46.6 in 2008.
There were more encouraging signs too: 82% of respondents expressed optimism about their financial future, 71% thought they were better off than their parents at the same age, and 56% said they understood how much they needed to set aside for the future in savings. Optimism was highest among Filipinos earning P700,000 (US$16,240) or more a year.
69% also said their credit card played “an important role in helping manage finances” and 48% paid off their outstanding balance every month. Though 40% said they were confident they had enough savings to support them for three months, the Philippines average savings reserve was only about nine weeks’ worth.
Citi said despite the overall Fin-Q score remaining low, the results showed Filipinos were getting better access to financial education, improving their financial literacy, and that attitudes and behavior towards finances in the country were improving.
source & article: Citi, The Philippine Star
Malaysia’s two largest banks, Maybank and CIMB, are suiting up to duel for a merger with RHB capital, which could result in a US$6.7 billion deal and one of Southeast Asia’s largest banking groups. According to this report from Reuters, competition has caused compressed net interest margins (what a bank takes in from loans and pays out in deposits) and no less than Prime Minister Najib Razak himself has called for Malaysia to create ‘regional banking champions’ to boost investment. This all seems to point in one direction: a round of Malaysian bank consolidation, starting here.
Maybank and CIMB were given permission by Bank Negara Malaysia to begin three months of merger negotiations starting 31 May. Should Maybank succeed it would create Southeast Asia’s largest bank by market value, though a CIMB-RHB merger would rank second below DBS.
The news comes as no great surprise, given the Malaysian government’s overt support for mergers and rumors of the Big Two’s interest in RHB since Abu Dhabi Commercial Bank announced it was selling its 25% share in March. Japan’s Sumitomo Mitsui Financial Group and the US-based private equity firm Carlyle group had also expressed interest in buying. Whoever succeeds will be required by law to negotiate to purchase another 45% in RHB, currently held by the Employees Provident Fund (EPF).
UPDATE: in the midst of all this, RHB is still pushing ahead with its own expansion plans, possibly looking at medium-to-large acquisitions in Thailand. It has just launched a RHB branch in Bangkok and has already acquired small Indonesian lender Bank Mestika.
source & article: Reuters
We’re seeing more interest from Japanese companies in Southeast Asian assets. Yesterday Japan’s second largest bank (by market cap) Sumitomo Mitsui Financial Group Inc made a bid for a 25% share of Malaysia’s fourth largest (by assets) RHB Capital Bhd.
Business Times reports that the Carlyle Group, a US private equity firm, has also put in an offer. The 25% currently belongs to Abu Dhabi Commercial Bank PJSC, which is looking to sell. The news took RHB Capital’s share price up 2.4% to a 14-year high, valuing the 25% stake at RM5 billion (US$1.66 billion).
While Japan’s recent disasters and subsequent economic downturn have sparked a new interest in overseas investments, Japan’s large corporations were already keen to move into Southeast Asia before the events, facing competition from their Chinese and South Korean counterparts. Takeda Pharmaceutical Co. and Toshiba Corp also announced yesterday a combined $16 billion in overseas takeovers. Mitsui Sumitomo Insurance Corp bought 50% of Indonesia’s PT Sinar Mas Multiarta this month for $820 million, while Mitsui & Co trading company grabbed a 30% share of Malaysia’s Integrated Healthcare Holdings for RM3.3 billion ($1.09 billion).
source & article: Business Times
Representatives from one of Australia’s ‘big four’ banks, the Australia and New Zealand Banking Group Ltd (ANZ-BGL) met with Philippines President Benigno Aquino recently, making a commitment to ‘support, develop and expand the Australia-New Zealand business community in the Philippines’.
In the immediate future, this involves expanding ANZ-BGL’s Philippines call center operation, which currently employs 400 Filipinos. Expansion could see another center opened and staff increased to 2000. ANZ-BGL’s CEO Michael Smith also met with Philippines Finance Secretary Cesar Purisima and Trade Undersecretary Zenaida Maglaya.
There have been other rumblings lately of a desire to develop the Philippines as a regional financial services hub. Multinational Johnson & Johnson just opened a Global Financial Services Center (GFS) at its headquarters in Parañaque City. According to Vice President and Finance and CFO Dominic Caruso, the center would “provide high-quality and cost-effective transactional processing and financial reporting services under global governance, executed at a global, regional, and country level as required.” He also praised the level of training and work ethic of the local workforce.
Assets under management in Singapore totalled S1.4 trillion (US$1.13 trillion) in 2010, up 13% on the previous year and recording a 16% growth average over five years.
The figures, along with new incentives like tax breaks and regulation simplification highlight Singapore’s competition with Hong Kong to be Asia’s major financial center. Hong Kong hasn’t released official asset management totals for 2010 yet, but its 2009 figure was US$1.09 trillion, a 45% growth on 2008. Singapore’s asset management sector grew 40% over the same period.
Reuters reports that of Singapore’s assets under management, 51% were in equities, 16% in fixed income, 12% in cash and money markets, 13% were in ‘alternative investments’ and 8% were in other mutual funds. The industry employed 11,200 people in Singapore, of which 2,700 were investment professionals.
On the same day, HSBC announced it plans to nearly double the pre-tax profit of its Singapore operation to US$1 billion within five years, adding 1,000 to its existing staff of 3,500 there. The move hints at another shift of focus towards Asia as HSBC, Europe’s largest bank, considers selling off its US credit card business.
Bloomberg has issued its inaugural list of ‘World’s Strongest Banks’ and Singapore has done well, with OCBC taking the top spot and DBS Group and United Overseas Bank (UOB) coming fifth and sixth respectively.
What ranks a bank the World’s Strongest? Bloomberg compared banks with at least US$100 billion in assets around the world. The system:
weighs and combines five criteria, including Tier 1 capital compared with risk-weighted assets; nonperforming assets compared with total assets; and efficiency, a comparison of costs against revenues.
‘Tier 1 capital’ includes includes a bank’s cash reserves, outstanding common stock and some classes of preferred stock, which all form a kind of ‘shock absorber’ against economic bad times. Strict supervision by the Monetary Authority of Singapore (MAS) helped the banks score well, since its rules requires banks to keep higher amounts of Tier 1 capital than foreign banks. Not only that, but the banks themselves keep reserves even higher than the MAS minimum.
You might say this ranking suits the mood of the current climate. While Singapore banks employ less leverage than others, investors may be drawn to a title like ‘World’s Strongest’ and terms such as ‘strongly capitalized’ and ‘prudent risk management’.
Hugh Young, the Singapore-based managing director of Aberdeen Asset Management Asia Ltd. was a lot more blunt:
“We are big holders of OCBC and UOB and have been for a long time simply because they don’t do the stupid things Western banks do,” says Young, who helps manage $70 billion in Asian equities. “They don’t do things like lending 120 percent of the value of a property to people without a job, and they don’t do stupid things in the derivatives markets and proprietary trading.”
For the record, the other banks in the Top 3 were Sweden’s Svenska Handelsbanken AB (SHBA) and the National Bank of Canada. Canada had five banks in the list’s Top 20 while the US managed only three.
The Wall Street Journal says major Japanese banks are looking to diversify their risks in Asia, building staff numbers in Malaysia and Indonesia. While the current big game for Japanese banks and others remains mainland China, competition from local lenders and a tough regulatory environment for foreign operators make expansion elsewhere more attractive.
Japan’s second largest bank by market cap, Sumitomo Mitsui Financial Group, wants to add to its 200 employees in Indonesia and last year announced plans to increase its Malaysian staff from 30 to 100. Joining them in the region are the other two of Japan’s ‘Big Three’, Mitsubishi-UFJ (MUFG) and Mizuho Financial Group , who have recently obtained commercial banking licences in Malaysia.
With their eyes on raising Japanese investment for large resource and infrastructure projects, they are teaming up with local banks, like MUFG’s alliance with Malaysia’s CIMB Group Holdings Bhd since 2006 and Indonesia’s CIMB Niaga since 2007. Mizuho has arrangements with Indonesia Eximbank and Malayan Banking Bhd (Maybank), and SMFG has made recent ties with Malaysia’s RHB Capital Bhd and Indonesia’s PT Bank Central Asia.
Syndicated loans, used to finance large scale projects, were worth around US$7.7 billion in Indonesia and Malaysia last year according to Thomson Reuters, up 15% despite investor queasiness following the worst of the global financial crisis. Japan’s banks will also face tough competition from other foreign banks with longer-standing operations in Southeast Asia, like HSBC and Standard Chartered.
source & article: online.wsj.com
Maybank is taking advantage of the Malaysian ringgit’s current higher value against the pound sterling, setting up a facility to allow customers to take ringgit loans to buy property in London.
The ‘Overseas Mortgage Loan Scheme’ expects a takeup of RM60 million ($19.7 million) as Malaysians buy commercial and residential properties in prime London locations like The City, Kensington, Westminster, Knightsbridge and Chelsea. Malaysia-based financing will be available for up to 85% of purchases with flexible payments and terms of up to 30 years or 70 years of a customer’s age (whichever comes first).
Until now, Malaysians interested in UK property had to take pound loans through UK-based banks, subjecting themselves to the risks of currency value volatility and were limited to purchasing ‘buy-to-let’ properties, rather than own occupation.
Maybank said it expects applications to peak early in the year, as the UK would institute a new 5% property tax on properties over 1 million pounds from April. The ringgit’s improved value and lower real estate prices have seen a recent surge in interest among high net worth Malaysians looking to buy in western European properties, either as investments or as housing for children studying overseas.
source & article: The Edge Malaysia
Citigroup expects investment banking revenues in Southeast Asia to soar this year, and showed its confidence by moving one of its two Asia-Pacific chief executives from Hong Kong to Singapore.
Shirish Apte will relocate to focus on ASEAN nations as well as India and Australia, while Stephen Bird will remain in Hong Kong to deal with greater China, Korea and Japan.
Thanks to record volumes of initial public offerings and debt deals, investment banking revenue reached a record US$1.59 billion in 2010 (up from $1.19 billion in 2009). This is despite higher than expected inflation rates and political volatility in some Southeast Asian countries, and Mr. Apte said conversations with clients had revealed there was still a high level of interest in ASEAN investment.
Companies would increasingly turn to capital-raising from investors as banks became more risk averse and the new Basel III regulations required banks to maintain higher levels of capital and keep more liquid assets. Meanwhile, ASEAN stockmarkets were among the world’s best performers in 2010. Mr. Apte identified key areas of activity as real estate and financial services in Singapore, palm oil and energy in Malaysia, and resources and commodities in Indonesia.
Citigroup has operations in all ASEAN countries except Cambodia, Laos and Burma, with $57 million in investment banking revenues. It is also the first US bank to offer credit cards in Vietnam, and assisted the Vietnamese government raise $1 billion through debt sales.
source & article: Dow Jones via The Australian
Maybank won’t stop with its intended acquisition of broker Kim Eng, according to analysts, and will likely continue its march into Southeast Asia by buying a Thai bank sometime soon.
Analysts from HwangDBS Vickers Research and RHB Research said a commercial bank in Thailand would be the next “obvious move” for Maybank since it has no current presence there, but the company will need to spend some time looking for potential targets. Although Maybank’s management have denied any further M&A plans in the next 12 months, it has commercial operations in all surrounding countries and Thailand’s huge market represents a glaring gap in its plans to spread throughout Southeast Asia.
Kim Eng is Thailand’s number one broker, with 41 branches. Maybank’s ability to acquire 100% of the company as planned is still uncertain, but it would be a big step towards establishing itself as an investment bank and equities trader in the region. Reactions to the news have been positive so far, with Kim Eng’s shares hitting a record high of S$3.04, just below Maybank’s offer of S$3.10.
source & article: Business Times