APAC-BFSI-Outlook-2017

Asia sees rise of regional banks Asia’s ascendance in the global economy has propelled the growth of international financial institutions in the region. As the banking and financial services industry flourished, regional players, largely domestic heavyweights, also entered the competition. They grew swiftly by tracing regional trade flows and following their clients and business partners across Asia in the years leading up to the GFC. The GFC slammed the brakes on cross- border lending worldwide. In Asia, however, the crisis also created a golden opportunity for the region’s banks. Unlike the rest of the world,2 Asia- Pacific rapidly recovered from the fall- off in international lending, with Asian banks accounting for a rising share of cross-border credit in the region – from 31% in 2007 to 57% in 2014.3 With global lenders retrenching from Asia, the post-GFC recovery period was an opportune time for regional banks to put their strong balance sheets to good use. Moreover, the tightening of global regulations has hardly limited the aggressive expansion of the region’s banks; Moody’s Investors Service found in mid-2015, for instance, that banks within the Association of Southeast Asian Nations are well-capitalized and able to comply with stricter rules under Basel III.

MOST EXPENSIVE OFFICE LOCATIONS IN THE WORLD

205

200

184

156

150

115 113 108 106 105 105 104 98 98 97 94 91 86 82 80 80

100

72

50

Prime Rent (USD/Sf/Year)

0

Source: Cushman & Wakefield Research

BASEL 3

BASEL Corporate Governance

Consumer Protection Measures

Capital adequacy / bu ers Stress testing / leverage ratio

1

Financial reporting (IFRS) Foreign account tax compliance (FATCA) Anti money laundering Know your customer

Shadow banking controls Shadow banking controls

2

Liquidity Risk / Coverage ratio

3

Organization of foreign a…liates

Capital & Liquidity Increase scrutiny / lending norms

Risk & Reporting

Consolidations, standardizing operations / remunerations / incentives

Distressed assets nofication guidelines

Governance & Reforms

Risk management

Source: Cushman & Wakefield Research

2 http://www.frbsf.org/banking/programs/asia-program/pacific-exchange-blog/whats-behind-slowdown-in-asian-cross-border-lending/ 3 http://www.bis.org/publ/qtrpdf/r_qt1509j.htm

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