ASEAN banking system to be adopted

Central banks in the ASEAN will set up an ASEAN bank system.

This is meant to make it easier for designated banks to set up subsidiaries and operate throughout the region.

The plan is thus likely to begin only in Singapore, Malaysia, Thailand, Indonesia and the Philippines, the five more developed countries in the region.

These states will provide technical assistance to other five ASEAN members -- Brunei, Vietnam, Cambodia, Laos and Myanmar -- where financial markets are less developed.

The ASEAN central banks will also set up a working group to draw up an ASEAN bank standard.

According to the source, so far only three banks -- from Singapore, Malaysia and Thailand -- meet the anticipated standard.

"These are banks that have subsidiaries or branches in other ASEAN countries. Most likely they will be the first to enjoy the scheme," the source said. "The purpose is to integrate banking services in the region. There should be more ASEAN banks in other countries, more flow of banking services, and there should be some common standard in the region."

The banks to be selected are required to be headquartered within ASEAN, financially sound and already operating in the region.

"If accepted, a bank can have a license automatically from the 10 member countries," an official source said. "The ultimate goal is to promote financial market integration, one of the core ideas of the ASEAN Economic Community."

ASEAN central bank governors are expected to discuss the initiative at meetings to be held on the sidelines of the ASEAN finance ministers meeting in Phnom Penh later this month.

The plan is part of a wider roadmap to integrate the region's financial markets in line with ASEAN's goal to create an economic community by 2015.

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