Malaysia's top two banks, Malayan Banking Bhd (Maybank) and CIMB Group
Holdings Bhd, say the Basel III package of measures to strengthen the global
financial system needs more scrutiny and are calling for more time to
"tweak" the new regulations.
One of the deepest concerns is
that the banking sector could lose investor appeal, Maybank said at the
Institute of International Finance annual meeting here.
The Basel III package of measures
will see a gradual phase-in of the standards from next year until 2019.
"The consultative papers
have been placed with the central banks," said Maybank president and chief
executive officer Datuk Seri Abdul Wahid Omar.
Overall, while there are some
elements like trade finance and small and medium enterprises (SMEs) that can be
tweaked, the banking sector must be prepared for Basel III.
"We saw it as an eventuality
and that was why we raised US$1.2 billion (RM3.66 billion) blanket capital to
make sure we are prepared," he said in reference to last week's successful
completion of a bookbuilding exercise in relation to its private placement.
He called for a level playing
field, arguing that the risk weighted assets of European banks are between 20
per cent and 30 per cent, one third that of Asian banks, which measure at
between 50 per cent and 60 per cent.
CIMB Group chief executive Datuk
Seri Nazir Razak said there are details that need to be looked into as well as
Basel III's implications on the banking landscape.
Basel III, he said, is crafted in
the context of problems in the West, which is heavily reliant on a global
ratings framework that is biased against developing countries.
Nazir said further scrutiny shows
that the new regulations will be disadvantageous to Asian banks.
"It places excessive
liquidity requirements on Asian banks when there is so much of liquidity in the
region and likewise, there is too much emphasis on government bonds when there
is enough in Asia."
Smaller banks also stand to
suffer as Basel III means heavy compliance costs.
"The West wants to
deleverage but Asia has a huge appetite for funds and we need to intermediate
that or, otherwise, it will be counter-productive," said Nazir.
Asian banks will need to boost
their cooperation and make sure Basel III does not impact their capacity to
give out funds.
Australia and New Zealand Banking
Group Ltd CEO Michael Smith suggested providing degrees of flexibility (to
adopt Basel III), according to the various nations.
Most Asian banks can meet all the
targets under Basel III, unlike their European counterparts, some of which will
find it difficult to impose the capital requirement.
A more pragmatic approach is
needed, he said, adding that the economic structure of Asia is different.
"The sheer amount of
liquidity moving around the world due to the monetary easing of central banks
in Europe or the United States creates an issue in Asia as investors chase the
yields," said Smith.
The shift from Basel 1 to Basel
II took 20 years while the shift from Basel II to Basel III took 18 months.
Wahid said Asean, which has set a
target to become the Asean Economic Community by 2015, needs to be served by
well-capitalised and well-distributed regional banks.
Apart from Maybank, CIMB and
Public Bank of Malaysia, there are the DBS Bank, OCBC Bank and UOB Bank from
Singapore and the Bangkok Bank of Thailand.
He is looking to Indonesian banks
next to expand their reach to other Asean countries.
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