Foreign banks are already checking out local acquisitions in the run up to the full liberalisation of the Malaysian banking market in 2007. Bank Negara, the central bank of Malaysia, will then allow foreign banks to buy local ones, although in the next few years it will gradually allow some foreign banks to open more branches and have off-site ATMs.
Zarir Cama, CEO of HSBC Bank Malaysia Berhad, said: “This market is one where we want to grow. We will certainly consider the option of buying a bank if and when we are permitted to do so.” After Hong Kong, Malaysia is HSBC’s second-biggest business in the Asia Pacific region. The bank also has a global service centre located there.
However, local banks may have snapped up some of the better banks by the time liberalisation arrives. Bank Negara has said it would like more consolidation, although it has not put a timeline, saying this should be driven by the market.
Healthy growth in the economy – expected to be as much as 5.5% this year – and in Malaysia’s role as a centre for Islamic finance are behind the foreign bank interest. The other two well-entrenched banks with branches in Kuala Lumpur, Standard Chartered and Citigroup – the latter with few branches but domination of the credit card market – are also believed to be interested in expanding their franchises.
“We are always open to acquisition opportunities if and when they arise,’’ says Shayne Nelson, CEO of Standard Chartered Bank Malaysia. “As Malaysia’s oldest bank, we have a good network of 30 branches spread out in nearly every one of the 14 states.’’
Standard Chartered’s consumer finance business represents about 60% of its exposure, with corporate taking up the rest.
HSBC currently has 36 branches and would ideally like 50, but located differently than those at present, says Mr Cama. Its business is half corporate, half retail. Islamic assets are responsible for more than 4% of the overall business to June 30, 2003, and have continued to grow steadily.
Last year saw major growth in terms of Islamic products in Malaysia. About 44% of the debt capital markets in 2003 were Islamic.
