Friday, September 24, 2010

Global financial regulatory reforms need Asian perspective, say bankers

KUALA LUMPUR: The global financial regulatory reforms should include an Asian perspective as the Asian economies have a lot of experience and views to contribute to global policy discussions, according to a meeting of Asia's senior bankers.

The Institute of International Finance (IFF) annual Asian meeting of chief executive officers, voiced concerns that the proposed global financial regulatory reform was heavily designed to address weaknesses in Western financial centres.

'We need a stronger Asian voice in international financial matters, both in the public and private sectors as the Asian economies have a lot of experience and views to contribute to global policy discussions,' said IIF managing director Charles Dallara at a media briefing on Friday, Sept 24.

He said Asia has a resilient, well capitalised and well regulated banking system. The Asian crisis was painful, and fortunately lessons were learnt by the Asian bankers.

'Poor risk management, poor governance structure and inappropriate compensation in the European and US banks, were some of the problems experienced by Asia a decade ago. As we reform the global framework, be mindful of the different circumstances faced by Asian banks,' he said.

The two-day meeting, attended by senior bankers, government leaders and financial experts, was organised by CIMB Group. It was held in Kuala Lumpur.

The conference provided senior bankers with the opportunity to exchange views on key economic and financial issues facing the region, with their peers, leading officials and financial experts.

Dallara said it was incumbent for leaders in the region to recognise that not all developments in Basel is applicable.

'While the US and Europe's capital standards need to be raised, it is (unclear) that it needs to be implemented in Asian banks,' he added.

In a statement released at the media briefing, IFF said the participants raised the unwarranted constraints on the availability of bank credit could be highly detrimental to economic growth and development in Asia.

'Regulation and supervision need to be strong enough to contain risk in the financial system, but not so restrictive that they stifle financial development and needed credit growth,' said the IFF.

Just a few weeks ahead of the upcoming first Group of 20 (G20) in Asia, Dallara added some of the themes discussed here would be presented at the G20 summit in Seoul.

The group chief executive of CIMB Group, Datuk Seri Nazir Razak added that balance between stability and growth was important.

'In general, Asian banks would not have any problem complying with the minimum standard set by Basel. We did express that the acceleration of compliance by banks would slow down the global economy.

'We were concerned about the potential amplified role of rating agencies in derivations of capital within banks. In that regard, we felt there was a certain bias towards Western countries. We had discussed the need for Asian credit ratings for a more balanced view,' he said.

Nazir also said the meeting discussed the acceleration of the Asian Banking Framework that would support economic and financial integration in the region.

'As the local economies integrate, it is important that we look at the banking framework so banks can capitalise on it. At the same time, we need to deal with cross-border banking supervision upfront rather than when it is needed. We are urging central bankers in Asia to look into this,' he said, adding that it would be put forth to the ASEAN countries first before expanding it to the wider Asian region.


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