The Star
Thursday June 19, 2008
Need for better ICM infrastructure
BNP Paribas: Ease Islamic banking rules
KUALA LUMPUR: Although Malaysia has successfully prepared to position itself as a global Islamic capital market (ICM) hub, it needs to improve its ICM infrastructure and offer more innovative Islamic financial products.
BNP Paribas Asset Management Sdn Bhd executive director Angelia Chin said local regulators must put in place a comprehensive infrastructure and regulatory framework for foreign players that were keen to expand and broaden their involvement in ICM.
“We want to see Malaysia easing its rules, allowing banks to conduct Islamic banking business in foreign currencies while continuing to develop and refine innovative Islamic financial products,” she told a media roundtable held in conjunction with the Malaysia ICM Conference 2008 yesterday.
The conference was jointly organised by Bursa Malaysia and the Malaysia International Financial Centre.
Hong Kong-based BNP Paribas Asset Management Asia Ltd structured funds manager Erkan Yilmaz said there was a need to develop specialised Islamic products to cater to both retail and institutional investors.
To date, the ICM products available include debt and equity instruments, global Islamic bonds or “sukuk”, Islamic real estate investment trusts (REITs), Islamic private equity funds and Islamic exchange traded funds (ETFs).
(An ETF is a unit trust fund that is listed and traded on a stock exchange and designed to track the performance of an index.)
Yilmaz said the launch of ETFs by Malaysia was a good move as it enabled fund managers to easily invest in core strategic investments.
CIMB Islamic Bank Bhd executive director and chief executive officer Badlisyah Abdul Ghani, meanwhile, described sukuk as the ambassador for all the Islamic financial products.
Malaysia has grown to be the world’s largest Islamic bond market, accounting for about 60% of global Islamic bonds outstanding, which are worth about US$100bil.
Badlisyah said Islamic REITs and ETFs were also gaining popularity among local and overseas investors keen to diversify their investments in ringgit-based instruments.
To date, syariah-compliant stocks account for about 86% of stocks listed on Bursa and 65% of total market capitalisation.
Aishaya Group head of share division Abdulkader S. Thomas said: “We are seeing an increasing uptake of Malaysian Islamic products outside the region.”
He said there was an interesting phenomenon lately whereby hedge fund managers were seen growing their investment in Islamic products.
Thomas also said there was a need to train and educate new talents to become experts in ICM.
Badlisyah added that Malaysia had a large pool of talent that could be groomed for ICM.
“We need to train bankers to become syariah experts, and syariah experts to be good bankers,” he added.
http://thestar.com.my/news/story.asp?file=/2008/6/19/business/21589827&sec=business
Thursday, June 19, 2008
Saturday, June 14, 2008
Zeti: Too early to know impact of fuel price hike
Friday June 13, 2008
KUALA LUMPUR: It is too early to see the impact of the recent fuel price increase on inflation and growth, says Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz.
The central bank would need to study carefully the impact as it was not just the slowing down of the external sector but also involved the effect of stimulus packages being put in place as well as recognising the nature of price increase due to rising costs, she said.
“We have to make a careful assessment whether this is passed on to consumers. When that happens, then you have the inflation when there is a generalised price increase,” Zeti told reporters after the launch of the International Centre for Education in Islamic Finance’s (Inceif) Masters programme in Islamic finance yesterday.
Currently, she said, there were only specified prices rising.
“It is too early to assess whether this is being translated and passed on and whether the producers have the capacity like what they had so far in absorbing part of the increased cost. Then, the consumers’ response, whether they will continue with very strong demand or whether we see some moderation.
“All this will be assessed very carefully in the months to come as we determine our monetary policy response,” she said.
Bank Negara’s interest rate policy would depend on the outlook on inflation and growth, she added.
On slipping into negative interest rate territory, Zeti said Malaysia had some negative real interest rates but as long as it was not fundamental, it would not damage consumer demand and the position of consumers.
Asked if the central bank would consider intervening in the currency market to avoid any instability, she said: “The underlying trend is not something that we try to influence and from time to time, you would see volatility. In fact many times, there will be increased volatility because of the great uncertainty that is occurring in the international financial system.” – Agencies
KUALA LUMPUR: It is too early to see the impact of the recent fuel price increase on inflation and growth, says Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz.
The central bank would need to study carefully the impact as it was not just the slowing down of the external sector but also involved the effect of stimulus packages being put in place as well as recognising the nature of price increase due to rising costs, she said.
“We have to make a careful assessment whether this is passed on to consumers. When that happens, then you have the inflation when there is a generalised price increase,” Zeti told reporters after the launch of the International Centre for Education in Islamic Finance’s (Inceif) Masters programme in Islamic finance yesterday.
Currently, she said, there were only specified prices rising.
“It is too early to assess whether this is being translated and passed on and whether the producers have the capacity like what they had so far in absorbing part of the increased cost. Then, the consumers’ response, whether they will continue with very strong demand or whether we see some moderation.
“All this will be assessed very carefully in the months to come as we determine our monetary policy response,” she said.
Bank Negara’s interest rate policy would depend on the outlook on inflation and growth, she added.
On slipping into negative interest rate territory, Zeti said Malaysia had some negative real interest rates but as long as it was not fundamental, it would not damage consumer demand and the position of consumers.
Asked if the central bank would consider intervening in the currency market to avoid any instability, she said: “The underlying trend is not something that we try to influence and from time to time, you would see volatility. In fact many times, there will be increased volatility because of the great uncertainty that is occurring in the international financial system.” – Agencies
Friday, June 13, 2008
Maybank a potential superbank
Thursday June 12, 2008
KUALA LUMPUR: Malayan Banking Bhd (Maybank) has been named as one of the banks with the potential to make it to the “superbank” list.
Retail Banker International (RBI), a London-based banking industry newsletter, said Maybank, together with other banks like Standard Chartered (StanChart) and OCBC, were expected to rise and become “superbanks” soon.
“Other banks to watch out for include ICICI, ANZ, Siam Commercial Bank and Australia's Big Four and Japan's major banks,” Hugh Fasken, editor of RBI, said in a statement yesterday.
Fasken said research conducted by FBI showed that the rise of “superbanks” was due to globalisation, consolidation and a focus on distribution that created groups with over 10,000 branches and automated teller machine (ATM) network.
Last March, Maybank acquired 55.7% equity in Bank Internasional Indonesia for RM4.8bil and would made an offer for the remaining 44.3%, which would bring up the total acquisition cost to RM8.6bil.
Some analysts believed that such a move was important to Maybank in its efforts to become more competitive, strong and an established financial institution in the region.
Besides Maybank, other banks had also made moves into the regional banking market.
They included CIMB Bank Bhd, which had taken a controlling interest in GK Goh Securities, a Singapore stock broking firm, on June 2005 with a total investment of RM555mil. Others are AmBank, RHB and Public Bank.
Fasken said there were now over 10 banking groups worldwide with more than 10,000 branches.
“However, only five of the top 30 “superbanks” hail from Asia. These include Chinese banks such as Agricultural Bank of China and Commercial Bank of China, which top the list due to their vast branch networks,” he said.
Fasken said State Bank of India passed the mark when it opened its 10,000th outlet in April and also it had plans to open a further 2,000 by end-2009.
On why there were so few Asian superbanks, Fasken said this was due to the lack of branch networks.
“Maybank, Singapore's DBS, the Australian Big Four, India's ICICI and Thailand's Siam Commercial Bank, for example, simply do not have large enough branches or ATMs.
“However, the Asia-Pacific region is well represented in the top 15, with Chinese banks dominating the top of the table,” he said. – Bernama
KUALA LUMPUR: Malayan Banking Bhd (Maybank) has been named as one of the banks with the potential to make it to the “superbank” list.
Retail Banker International (RBI), a London-based banking industry newsletter, said Maybank, together with other banks like Standard Chartered (StanChart) and OCBC, were expected to rise and become “superbanks” soon.
“Other banks to watch out for include ICICI, ANZ, Siam Commercial Bank and Australia's Big Four and Japan's major banks,” Hugh Fasken, editor of RBI, said in a statement yesterday.
Fasken said research conducted by FBI showed that the rise of “superbanks” was due to globalisation, consolidation and a focus on distribution that created groups with over 10,000 branches and automated teller machine (ATM) network.
Last March, Maybank acquired 55.7% equity in Bank Internasional Indonesia for RM4.8bil and would made an offer for the remaining 44.3%, which would bring up the total acquisition cost to RM8.6bil.
Some analysts believed that such a move was important to Maybank in its efforts to become more competitive, strong and an established financial institution in the region.
Besides Maybank, other banks had also made moves into the regional banking market.
They included CIMB Bank Bhd, which had taken a controlling interest in GK Goh Securities, a Singapore stock broking firm, on June 2005 with a total investment of RM555mil. Others are AmBank, RHB and Public Bank.
Fasken said there were now over 10 banking groups worldwide with more than 10,000 branches.
“However, only five of the top 30 “superbanks” hail from Asia. These include Chinese banks such as Agricultural Bank of China and Commercial Bank of China, which top the list due to their vast branch networks,” he said.
Fasken said State Bank of India passed the mark when it opened its 10,000th outlet in April and also it had plans to open a further 2,000 by end-2009.
On why there were so few Asian superbanks, Fasken said this was due to the lack of branch networks.
“Maybank, Singapore's DBS, the Australian Big Four, India's ICICI and Thailand's Siam Commercial Bank, for example, simply do not have large enough branches or ATMs.
“However, the Asia-Pacific region is well represented in the top 15, with Chinese banks dominating the top of the table,” he said. – Bernama
Saturday, June 7, 2008
Zeti: Inflation likely to reach 10-year high
Friday June 6, 2008
KUALA LUMPUR: Bank Negara sees Malaysia's inflation rate rising to a 10-year high following the recent increase in petrol prices but says it will not alter its current interest rate policy.
Governor Tan Sri Dr Zeti Akhtar Aziz said that as a result of rising energy prices, Malaysia’s inflation rate would average 4.2% this year but there was no rush for the central bank to raise the current overnight policy rate of 3.5%.
“We do not consider it of any urgency to call a special meeting of the monetary policy committee and we will make that assessment going forward,” she told reporters after delivering the keynote address at the 12th Malaysian Banking Summit here yesterday.
The central bank had earlier set an inflation target of 2.5% to 3% for this year.
The inflation rate of 4.2% would be the country’s highest since 1998 when it peaked at 5.3%.
“Right now, we don’t see any critical developments. The Government has the capacity to deal with both rising prices and how they impact certain target groups,” Zeti said.
She said the initial price impact would be felt in June during which inflation was expected to be about 5%.
“The increase in prices is expected to peak in the first quarter of 2009 before moderating to less than 3% in the fourth quarter,” she said.
On Wednesday, the Government revised upwards the price of petrol to RM2.70 per litre from RM1.92 per litre previously while the price of diesel was also increased by RM1 to RM2.58 a litre.
Zeti said despite the inflationary pressure, the economy was expected to expand 5% this year. Last year, the economy grew 6.3%.
She also reiterated that the central bank had no plans to use the ringgit as a policy tool. “The foreign exchange would continue to set the currency’s value,” she said.
KUALA LUMPUR: Bank Negara sees Malaysia's inflation rate rising to a 10-year high following the recent increase in petrol prices but says it will not alter its current interest rate policy.
Governor Tan Sri Dr Zeti Akhtar Aziz said that as a result of rising energy prices, Malaysia’s inflation rate would average 4.2% this year but there was no rush for the central bank to raise the current overnight policy rate of 3.5%.
“We do not consider it of any urgency to call a special meeting of the monetary policy committee and we will make that assessment going forward,” she told reporters after delivering the keynote address at the 12th Malaysian Banking Summit here yesterday.
The central bank had earlier set an inflation target of 2.5% to 3% for this year.
The inflation rate of 4.2% would be the country’s highest since 1998 when it peaked at 5.3%.
“Right now, we don’t see any critical developments. The Government has the capacity to deal with both rising prices and how they impact certain target groups,” Zeti said.
She said the initial price impact would be felt in June during which inflation was expected to be about 5%.
“The increase in prices is expected to peak in the first quarter of 2009 before moderating to less than 3% in the fourth quarter,” she said.
On Wednesday, the Government revised upwards the price of petrol to RM2.70 per litre from RM1.92 per litre previously while the price of diesel was also increased by RM1 to RM2.58 a litre.
Zeti said despite the inflationary pressure, the economy was expected to expand 5% this year. Last year, the economy grew 6.3%.
She also reiterated that the central bank had no plans to use the ringgit as a policy tool. “The foreign exchange would continue to set the currency’s value,” she said.
Financial sector to play vital role in 2020 economic target
Friday June 6, 2008
KUALA LUMPUR: The financial sector has an important role in helping Malaysia develop its economy by 2020 via the channelling of productivity and driving endogenous growth in other economic sectors, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said.
In her keynote address at the 12th Malaysian Banking Summit yesterday, Zeti said Malaysia had strong competitive advantages in two areas: Islamic finance and shared services and outsourcing (SS0).
“Malaysia is at the forefront of Islamic finance, housing the world’s largest sukuk market with 65.8% of the global outstanding sukuk as at end-March,” she said at the summit, themed Taking the Leap in Paradigm Shift of Banking - New Wave, New Ventures.
Zeti said the promotion of Malaysia as an international Islamic financial hub was expected to catalyse growth in other economic sectors.
“Positive effects are expected to spill over into the markets and related industries such as property, health, education and business services, spreading the sector’s growth momentum to the economy.
“The Malaysian banking sector on the whole is sound. Domestic banking institutions, in particular, have benefited from the broad-based reforms and capacity building measures that had been undertaken following the Asian financial crisis,” she said.
Zeti said the progress of the financial sector had surpassed initial expectations outlined in the Financial Sector Masterplan.
The financial sector, she said, had maintained a steady growth momentum since the Asian financial crisis, with the profitability of the Malaysian banking system growing by 36.7% to RM17.7bil last year.
Zeti said going forward, the industry’s liberalisation plan aimed to reinforce the role of the financial sector in the next phase of development, capitalising on core comparative advantages while reaping benefits from alliances and partnerships. “An area that will be pursued is increased strategic alliances with foreign partners and greater foreign participation in our financial markets,” she said.
On the regulatory front, Zeti said Bank Negara would continue to direct significant efforts and resources towards strengthening its surveillance capabilities to detect, monitor and to deal pre-emptively with emerging risks in the financial system.
KUALA LUMPUR: The financial sector has an important role in helping Malaysia develop its economy by 2020 via the channelling of productivity and driving endogenous growth in other economic sectors, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said.
In her keynote address at the 12th Malaysian Banking Summit yesterday, Zeti said Malaysia had strong competitive advantages in two areas: Islamic finance and shared services and outsourcing (SS0).
“Malaysia is at the forefront of Islamic finance, housing the world’s largest sukuk market with 65.8% of the global outstanding sukuk as at end-March,” she said at the summit, themed Taking the Leap in Paradigm Shift of Banking - New Wave, New Ventures.
Zeti said the promotion of Malaysia as an international Islamic financial hub was expected to catalyse growth in other economic sectors.
“Positive effects are expected to spill over into the markets and related industries such as property, health, education and business services, spreading the sector’s growth momentum to the economy.
“The Malaysian banking sector on the whole is sound. Domestic banking institutions, in particular, have benefited from the broad-based reforms and capacity building measures that had been undertaken following the Asian financial crisis,” she said.
Zeti said the progress of the financial sector had surpassed initial expectations outlined in the Financial Sector Masterplan.
The financial sector, she said, had maintained a steady growth momentum since the Asian financial crisis, with the profitability of the Malaysian banking system growing by 36.7% to RM17.7bil last year.
Zeti said going forward, the industry’s liberalisation plan aimed to reinforce the role of the financial sector in the next phase of development, capitalising on core comparative advantages while reaping benefits from alliances and partnerships. “An area that will be pursued is increased strategic alliances with foreign partners and greater foreign participation in our financial markets,” she said.
On the regulatory front, Zeti said Bank Negara would continue to direct significant efforts and resources towards strengthening its surveillance capabilities to detect, monitor and to deal pre-emptively with emerging risks in the financial system.
Banks need to be high Basel II-compliant by 2013
Friday June 6, 2008
PETALING JAYA: Malaysian banks will need be compliant with the highest level of Basel II banking risk management by 2013 to keep up with global developments.
Basel II is an upgrade of the previous global banking risk management accord Basel I that focused on credit risk and subsequently market risk.
Under Basel II, the risk capital charge has been extended to cover all risks including “operational risk”.
KPMG Business Advisory Sdn Bhd, head of ASPAC financial risk management, Dr John Lee, said: “It would be good to see Malaysian banks compliant to Advanced Measurement Approach (AMA) by 2013, not after that.”
He was speaking Wednesday at a press briefing on the KPMG Basel II in the Asia Pacific Banking Sector Survey 2008. At present, Malaysian banks were in the midst of adopting The Standardised Approach (TSA), which is the medium level of compliance, higher than the Basic Indicator Approach (BIA) but lower than AMA.
However, most banks were aiming to be compliant to AMA by 2010, but if they missed that target they could look towards 2013, Lee said.
The survey, conducted in the last quarter of 2007 with respondents from 35 banks in the Asia Pacific, was focused on operational risk management.
The survey on the “current state of play in operational risk” showed that banks in mature banking countries have generally adopted the AMA.
Based on KPMG's classification, mature banking countries in the region are Australia, Hong Kong, Japan, New Zealand, Singapore, South Korea and Taiwan.
The survey also found that among emerging countries, Malaysia had a generally more mature sector where seven in 11 banks were in the midst of adopting TSA.
On the subprime crisis, Lee said it was actually limited to the US and to some extent, the European markets.
“The world is affected mainly due to the large size and importance of the US market,” he said adding: “The US, which is different from most markets in that there are multiple regulators for the banking industry, was only scheduled to implement Basel II in 2009.
“I won’t say that Basel II policies would have stopped the subprime crisis but they probably could have reduced the amount of losses.”
http://biz.thestar.com.my/news/story.asp?file=/2008/6/6/business/21455989&sec=business
PETALING JAYA: Malaysian banks will need be compliant with the highest level of Basel II banking risk management by 2013 to keep up with global developments.
Basel II is an upgrade of the previous global banking risk management accord Basel I that focused on credit risk and subsequently market risk.
Under Basel II, the risk capital charge has been extended to cover all risks including “operational risk”.
KPMG Business Advisory Sdn Bhd, head of ASPAC financial risk management, Dr John Lee, said: “It would be good to see Malaysian banks compliant to Advanced Measurement Approach (AMA) by 2013, not after that.”
He was speaking Wednesday at a press briefing on the KPMG Basel II in the Asia Pacific Banking Sector Survey 2008. At present, Malaysian banks were in the midst of adopting The Standardised Approach (TSA), which is the medium level of compliance, higher than the Basic Indicator Approach (BIA) but lower than AMA.
However, most banks were aiming to be compliant to AMA by 2010, but if they missed that target they could look towards 2013, Lee said.
The survey, conducted in the last quarter of 2007 with respondents from 35 banks in the Asia Pacific, was focused on operational risk management.
The survey on the “current state of play in operational risk” showed that banks in mature banking countries have generally adopted the AMA.
Based on KPMG's classification, mature banking countries in the region are Australia, Hong Kong, Japan, New Zealand, Singapore, South Korea and Taiwan.
The survey also found that among emerging countries, Malaysia had a generally more mature sector where seven in 11 banks were in the midst of adopting TSA.
On the subprime crisis, Lee said it was actually limited to the US and to some extent, the European markets.
“The world is affected mainly due to the large size and importance of the US market,” he said adding: “The US, which is different from most markets in that there are multiple regulators for the banking industry, was only scheduled to implement Basel II in 2009.
“I won’t say that Basel II policies would have stopped the subprime crisis but they probably could have reduced the amount of losses.”
http://biz.thestar.com.my/news/story.asp?file=/2008/6/6/business/21455989&sec=business
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