Malaysian banks told to expand globally

Malaysian banks told to expand globally

KUALA LUMPUR (AFP): Malaysia's Deputy Prime Minister Anwar Ibrahim urged local banks yesterday to expand their networks in the global market to bolster their financial standing.

Anwar, who is also finance minister, said the banking industry could not afford to be complacent and should be prepared to compete with bigger and stronger foreign-based banks.

"If we do not move in this direction, our banks will end up being swallowed by foreign competitors from Japan, Europe and the United States," Anwar was reported as saying by Bernama news agency.

Anwar said Malaysia was committed to an open and liberal policy on its financial sector under the World Trade Organization but has to ensure that its own banking system was sound and competitive at the same time.

Liberalization and deregulation would have to be "implemented with care" under government supervision to prevent the sort of abuses and financial crises seen in some countries, he said.

Anwar predicted that the local banking industry would continue its robust growth given the country's sound macro-economic position. But he urged banks to step up the "introduction of new and innovative financial products."

Earlier, Anwar launched the formation of RHB Capital Bhd., a financial services institution under top broking house Rashid Hussain Bhd..

RHB Capital comprises Malaysia's top securities house, the second biggest bank following the merger of Kwong Yik Bank and DCB Bank, a leading merchant bank, the largest private fund manager and a growing finance firm.

Rashid Hussain Bhd. recently acquired top bank Maybank's 75 percent stake in Kwong Yik Bank for 2.16 billion ringgit (US$864 million), merging it with its DCB Bank unit to form RHB Bank. It has also bought a 20 percent stake in Indonesia's Bank Niaga this year.

"Although Maybank will always be ahead of us, RHB Bank will be a pre-eminent Malaysian-based investment banking group under the RHB brand name," RHB's executive chairman Rashid Hussain said.

The company, which he described as a "home-grown banking group", aims to be the largest fully-integrated financial group in the country, he said.

Its securities division, which has offices in Manila, Singapore, Jakarta, New York and London, presently accounts for about seven percent of trade on the Kuala Lumpur Stock Exchange.

Its asset management arm is seeking to manage some 10 billion ringgit with the future introduction of new products, he added.

It now manages assets worth 2.7 billion ringgit in Malaysia and another three billion ringgit in Singapore.

RHB stock was flat at 16.00 ringgit on the local bourse in late trade Monday.