Posts tagged finance
The World Bank Group (WBG) has announced it will set up a new office in Singapore, its first outside Washington DC. It said the new branch will employ over 70 people within three years, including director Bert Hofman, the bank’s current Chief Economist for the East Asia region.
The WBG office’s main purpose is to advance private-sector investment for infrastructure projects in East Asia’s developing regions, with ready access to Singapore’s large commercial banks and established companies. Channel NewsAsia reports it will also provide services through its Multilateral Investment Guarantee Agency (MIGA), which has experience with complex infrastructure projects and supports investments into and from Asia “by issuing risk guarantees to equity sponsors, banks, funds, and other financial institutions.”
source & article: Channel NewsAsia
Singapore will benefit from the current panic surrounding international markets, growing in stature as a financial hub as economic power shifts to the emerging world. Results from a survey by the Association of Chartered Certified Accountants (ACCA) of international financial centers revealed 61% of finance professionals rate the city-state as having grown in importance, well above the global average of 36.
The Global Economic Conditions (GEC) Survey measures the ‘significance’ of global financial hubs and the impact of the 2008-09 Financial Crisis by examining the opinions of 2000+ financial professionals around the world. 46% of all Singapore-based respondents now believe their location is a ‘center of global significance’ compared to the global average 18%, and 34% rated it a center of regional significance.
This is despite a surprising loss of confidence across the Asia-Pacific region, mainly due to disruption caused by the Japanese disasters in March and general pessimism over economic crises in the USA and Europe.
There were also concerns about monetary tightening and inflation, with 32% of respondents claiming to have had difficulty accessing finance and 71% reporting a rise in business costs. Governments around the world would also cut spending in an attempt to reduce inflation.
Darryl Wee, country head of ACCA Singapore, said: “It’s not a secret by now which way the global balance of power is shifting. What’s more interesting are the detailed findings which show a small group of global financial centres, including Singapore, enjoying an ever-growing advantage over their competitors. Going forward we expect that many emerging economies will redouble their efforts to develop global financial clusters.”
Malaysia’s biggest lender Malayan Banking Bhd (Maybank) hopes its recent acquisition of Kim Eng Holdings Ltd will strengthen its position in sukuk (Islamic bond) underwriting, after its share slipped from world’s second largest to fourth.
This was despite global sukuk sales growing 37% to US$6.7 billion on the back of economic recovery and growth in Asia and the Persian Gulf. Sales in Malaysia alone grew 51% to $4 billion. Maybank currently has a 9% share in the global market and dominates Malaysia’s 10-year dollar-denominated sukuk issuances, but has been restricted to local business and will need Kim Eng’s international reach to challenge larger players for the top spot, currently held by HSBC Holdings Plc with 24%. Malaysia’s CIMB took second place with 21%, and Standard Chartered Plc third with 13%.
Securities and investment banking group Kim Eng Holdings Ltd has offices in Malaysia, Hong Kong, Thailand, the Philippines, India, Vietnam, London, and New York. Maybank completed a 44.6% acquisition on 10 May this year for S$798 million (US$639 million).
The industry is hoping for a bright future in Malaysia and abroad, with US$444 billion in local economic development projects due to begin soon, and several Malaysian companies expected to begin refinancing later this year. Indonesian local currency issuances have been increasing as well, reaching Rp27.76 trillion ($3.24 billion) in 2010 and Rp17.94 trillion ($2.1 billion) so far this year. According to Bloomberg data, there is $59.3 billion worth of sukuk outstanding worldwide, with around $7.97 billion set to mature in 2012.
source & article: Business Times
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.
An excellent and honest write-up of Singapore’s financial charms in The Economist this week, describing how the city-state went from being a relative backwater just a few decades ago (when Citi could fit all 100 staff on the same boat) to today’s global financial center.
The article describes how Singapore benefited first from foreign currency trading, then from the offshore asset management boom and the Hong Kong handover. Its bankers now have over US$1 trillion in total assets under management. The government has set up structures for trust accounts, reduced bureaucracy and taxes, and streamlined visas for foreign talent. The internet is fast, the streets are clean and processes function efficiently.
Downsides have included a stock market that sometimes struggles to compete with Hong Kong’s for access to China, corporate scandals, and recent aggressive actions by affluent western countries to clamp down on offshore accounts. But the conclusion is that the financial environment couldn’t be better for Singapore at the moment, and other jurisdictions would need to provide a similarly business-friendly setting to compete.
source & article: The Economist
Large international equities firms are beginning to trickle back into the Philippines after a decade-long absence, with Credit Suisse announcing it will open a new local securities brokerage. The company obtained a broker-dealer licence from the Philippines Stock Exchange in February this year and hopes to beat the coming competition by expanding further its dominance in the Southeast Asian market.
Credit Suisse already has the largest market share of any foreign equities trader in Singapore, Indonesia, Malaysia and Thailand. A new Philippines branch signifies new confidence in and commitment to the country, with Southeast Asia CEO Osama Abbasi calling it an “important market” with “tremendous growth opportunities.”
As well as having research coverage of 15 Asia-Pacific equity markets and sales trading capabilities in 16, Credit Suisse has maintained a presence in the Philippines over the years since it began as a financial adviser there in 1992. Since 1995 it has advised on over US$14 billion worth of M&A deals involving Philippines based entities.
source & article: Business Inquirer
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