Nazir sees more exciting days for Asian banks

KUALA LUMPUR: Asian banks are poised to grow this year, especially now that banking regulations in the UK have been stepped up, according to CIMB Group Holdings Bhd chief executive Datuk Seri Nazir Razak.

“That opens up opportunities not only for European banks versus UK banks, but also for Asian banks versus UK banks,” he told reporters after his session at the Forbes Global CEO Conference.

“It is actually incredibly exciting if you think about how to position Asian banks in this environment,” he said, noting that despite the need to be cautious in today's uncertain economic times, “these will be watershed years for us when we look back.”

The UK's banking reforms, he said, were dramatic and made the banks less competitive.

Under wide-ranging reforms outlined by the UK's Independent Commission on Banking on Monday, UK banks would have to hold core capital of at least 10% in their domestic retail operations, in addition to primary loss absorbing capital of between 17% and 20%.

Only the Swiss banks have taken a similarly hard-line approach. By comparison, the new global regulation, which comes into effect in 2019, requires banks to hold between 7% and 9.5% of quality capital.

The move is aimed at preventing a repeat of the financial crisis that led to two of Britain's biggest lenders, Lloyds and Royal Bank of Scotland, being bailed out with massive injections of government cash.

Nazir also said there were good prospects to be had in a recession, particularly the Middle East. “If you look at the Middle East now, they are struggling, but in a year's time, there will be exciting opportunities there. You talk about the change that is happening in Egypt, Libya and so on. This change will come with transformation and potentially good growth opportunities. We want to monitor those.”

He also reiterated CIMB's Asean bank ethos, saying the company's Malaysian origins gave it the advantage of linking up with high-growth countries like China, India and the Middle East. “Our strategy is to be an Asean bank, but we will be plugged in to those markets,” he said.

Meanwhile, Nazir refuted any merger plans with smaller rival RHB Capital Bhd. “I don't say no to good growth opportunities, but this one is not on the table for us.”

CIMB and Malayan Banking Bhd (Maybank) were in separate talks to buy RHB four months ago, but the deal fell through due to pricing issues.

Recently, there was market chatter that Abu Dhabi fund Aabar was internally discussing a writedown of its US$1.9bil (RM5.9bil) purchase of a 25% stake in RHB as an incentive for Maybank and CIMB to rethink their offer for RHB.