Commentary

This article illustrates key drivers behind restructuring of banks in Vietnam and highlights the key priorities in the restructuring journey.

Banking in Asia has grown by leaps and bounds in terms of size, profitability, sophistication and maturity in the dozen years so far of the 21st century. One of the standouts in this growth has been Islamic banking. Although Islamic banking has a long and illustrious history dating back to the advent of Islam some 1500 years ago, in its current incarnation it is less than 50 years old. And, as happens in a relatively young industry, there are several debates about its form and substance. One of these relates to risk management in Islamic banking.

Despite current global economic conditions, demand is still evident across Asia’s banking and finance sector for particular skills. Here Christine Wright, Operations Director for Hays in Asia, discusses trends and current opportunities across the region from the latest Hays Quarterly Report.

With a decline of 16% in deal volumes and 29% in deal values in Q1 2012 over last year, Asia has not been immune to the global reduction in M&A activity over the last few quarters. However, there were still more than 2,700 transactions and $117 billion of total disclosed deal value involving Asian targets or acquirors in Q1 and Asia remains a certain destination for companies looking to gain exposure to fast-growing consumer markets or to assets in strategically important or demographically attractive industries such as energy and healthcare.

Global Banks have a grueling task of repositioning their business portfolio in view of financial upheavals in the wake of European crisis and American journey, to achieve financial freedom. In parallel to this unstable scene, revenue models in retail banking are radically changing, as traditional revenue sources of transaction-driven volumes are drying up and are being replaced with new wave of portfolio-driven revenue propositions, where customers are increasingly expecting banks to guide their financial destiny.

We proposed that Barclays should be split into two separate banks - one focused on retail banking and the other on investment banking - in our 5 July Commentary. That presumed, of course, that the investment bank would be viable and able to fund itself on a stand-alone basis in today's challenging markets.

The global banking industry is pretty much at an all time low in terms of reputation. Nowhere is this so true as in the UK, where it might have been thought that public opinion of the banks could hardly have sunk any lower in the aftermath of the financial crisis that has enveloped the global economy since 2008. But in the past few weeks a processing malfunction at RBS seriously affected millions of customer accounts, while the Libor rate-fixing scandal that has claimed the jobs of Barclays Chairman, Marcus Agius and Chief Executive, Bob Diamond.

Supervision of Spain’s troubled banking system has now passed largely into the hands of inspectors drawn from the European Commission, the IMF, the European Central Bank (ECB) and the European Banking Authority (EBA). This follows agreement by the European authorities to provide Spanish banks directly with up to €100bn of new capital via the EFSF bailout fund.

Many banks across the Asia Pacific (APAC) geography are implementing Core Banking products. These banks expect that a modern Core Banking product would give them a competitive edge, the ability to launch new products faster, lower operational costs and improve customer service. Unlike Europe or America, which are large with fairly standard banking offerings, the APAC geography is actually characterized by much more variety in its range of offerings.

The shift in the wealth management landscape from a client and regulatory perspective have significant technology implications for Asian Wealth Managers. There are three key areas in Wealth Technology that is taking centre-stage; namely, an increasing focus on client-centricity, using compliance as a competitive advantage, and a relentless focus on lowering the cost to serve through platform change.

Over the past couple of months, Europe has been at a crossroads. Ever since the fears among investors intensified in late 2010 regarding the financial stability of the southern European member countries, first and foremost Greece, European political leaders have implemented and applied a vast amount of tools to fend off the looming debt crisis. The current goal among Europe’s political elite is to prevent the debt crisis from spreading to bigger and too-big-too-bail-out economies in central and northern Europe and thereby to keep the Eurozone from breaking apart. These developments are closely watched by Europe’s economic partners, especially the US and Asia. Focusing on Asia in particular, the big question for Asian politicians, economists and market participants is now: how has or will the sovereign debt crisis in Europe affect Asia? Although the answer is everything but trivial, it is generally believed that Asia will most likely be affected in two ways: trade and finance.

The year 2012 has not been good for the Asian banking industry. Credit growth is falling in most Asian countries. For instance, new lending by the four biggest Chinese state-owned banks was flat in April and May 2012. There are multiple reasons for this. The primary reason is the slowdown of real GDP growth in most Asian countries. Newly released macro data predict a slump in the economy in those countries. Due to the expectation of a weak economy, the demand for new credit is not as strong as in previous years. Weak exports to the Eurozone and the U.S. will likely cause damage to the manufacturing industry in export-oriented Asian countries and reduce their demand for bank loans. The slowdown in real GDP growth and trade growth predicts a likely surge in non-performing loans in the Asian banking industry.

Barclays’ troubles and Bob Diamond’s resignation have not come as a surprise to experienced London bank-watchers. They have been brewing for years and came to a head last week when the LIBOR-fixing scandal broke. It was very clear which bank Sir Mervyn King had at the front of his mind when he called for leadership of an unusually high order and changes to the structure of the industry. He then went on to blast the banks for ‘excessive levels of compensation, shoddy treatment of customers, deceitful manipulation of one of the most important interest rates and… yet another mis-selling scandal’.

We’ve heard a number of announcements lately about new mobile near-field communication (NFC) devices.

Customer service in banking is one of the most important ways to keep customers coming back. It includes responding to customers’ questions and complaints in a thorough and timely manner.

How many of you can identify with the organisational environment described below?