Business

Thursday August 6, 2009

New blue print for financial system expansion likely

By YAP LENG KUEN


Major focus will be on building regional financial market

KUALA LUMPUR: The 10-year financial sector master plan (FSMP), which had mapped out the key developments starting from 2000, is likely to be replaced with a new blueprint for significant expansion of the financial system.

Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz told StarBiz: “We are pleased that within nine years, more than 90% of the recommendations have been implemented.’’

More emphasis is expected to be placed on the development of a vibrant regional financial market that can support the expansion in trade and investment activities within the region.

Stretching from India to South Korea, the regional coverage includes the rising powerhouse in China which has often been “blamed’’ for flooding the Western financial markets with its vast savings.

The 10-year financial sector master plan (FSMP), which had mapped out the key developments starting from 2000, is likely to be replaced with a new blueprint for significant expansion of the financial system. Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz told StarBiz: “We are pleased that within nine years, more than 90% of the recommendations have been implemented.’’

It is deemed high time that Asia developed its own financial market, for instance, in regional bonds, to capture and retain part of these savings.

With a large population base, Asia has the potential for further expansion. Rising incomes and an early recovery from the current global financial crisis put it in a good position to capture some of these opportunities.

Following the 1997 Asian financial crisis, Malaysia has made big strides in developing its bond market which can be further expanded into the regional arena.

Under the ambitions set out under the FSMP, Malaysian banking institutions have developed their scale and size to become financial supermarkets and regional champions.

In line with the aim to build meaningful size, greater specialisation and convergence was targeted.

The gap between local and foreign banks has narrowed considerably, with many local banking groups currently offering products and services that are competitive to those offered by the locally incorporated foreign banks.

The development of electronic payment channels and usage of information technology in the Malaysian banking sector have seen many milestones reached under the FSMP.

The enhancement of credit skill building measures and development of industry-wide benchmarks also came into focus under the master plan.

Many steps including increased surveillance and supervision, ascribing ratings on banks and risk weightings on capital and loans have been put in place.

On hindsight, many of these measures proved timely especially in the aftermath of the global financial crisis which had left Malaysian banks relatively unscathed.

The mergers of stockbroking houses and merchant banks had resulted in the creation of full-fledged investment banks, many of which are now poised to take advantage of the improving capital markets.

The role of new non-traditional players in the provision of finance is also considered an upcoming force as better value propositions emerge for the ever-discerning Malaysian consumer.

Along with these new consumer trends and the shift towards an increasingly deregulated banking sector, Bank Negara has put in more structures to ensure higher consumer protection.

In the area of talent development, issues such as staff mobility and talent attraction have also received a lot of attention.

The ownership structure of Malaysian banking institutions has also undergone significant transformation with the emergence of institutional and foreign investors.

RHB Capital Bhd has Abu Dhabi Commercial Bank as a strong partner in Islamic banking while the AmBank group has teamed up with the Australia and New Zealand Banking Group for further inroads into the retail, treasury and trade finance business.


For Bank Negara statements click here

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