Asean 5 defy the downturn, ANZ study reveals
While much of the focus at this year’s Sibos has been on China, today’s ‘Asean day’ highlights the emergence of the countries of the Association of South East Asian Nations (Asean). Many had expected the region’s trade integration to falter during the global financial crisis amid falling export demand. However a new report from Australia’s ANZ bank said the region had “defied the detractors and proved a resilient base for a new cohort of international banks”.
The report, Shaping the Future of Asean Banking, said trade integration was well advanced and the path was set for financial integration.
The Australian bank said in its experience, there were three broad approaches a bank could take to the region, depending on its presence, client base and strategy.
Regional banks are defined as “local champion banks” with seven or more “points of presence” across Asean. Such banks have deep investment in the region and the capital permanency to weather intermittent political and social upheaval, creation and destruction of bubbles, a changing competitive landscape and tougher regulation across developing markets in the Asean region.
Network banks typically look to match their onshore presence in Asean countries to the major centres of their customers’ operations, therein providing end to end service across major trade corridors. Often these banks have a strong presence across some or all of the Asean 5 countries (Singapore, Malaysia, Philippines, Indonesia and Thailand), but use alliances or partnerships to support customers in other Asean members with lower volumes.
Finally, partnership banks are the largest grouping, focusing on strong domestic services to local companies in home markets, including cash management and foreign exchange. As their local corporate customers expand presence beyond domestic borders and into a larger number of countries in Asia, partnership banks need a network of banks that can support their customers’ increasingly complex off-shore requirements.
Each of the approaches would likely need to be adapted as Asean evolved, said the report.