The integration of the region’s banks is a vital step in the evolution of Southeast Asia’s banking sector, yet local institutions must up their game to follow in the successful footsteps of their non-Asean brethren
Policy frameworks that should contribute to a smooth Asean financial integration in 2015 are in the works, in a big indication that central banks and banking sectors across the ten Asean nations are stepping up their preparations for the upcoming assimilation.
It is expected that integrating the region’s banks will help create an environment conducive to the emergence of banking institutions able to compete at a global level – something that has remained elusive for the region’s banks despite strong growth in asset sizes since the 1990s.
The ‘Asean Five’ (Indonesia, Malaysia, the Philippines, Singapore and Thailand) have already opened up their banking sectors, but cross-border banking has not developed as quickly as was hoped. With overseas banks such as Citibank, HSBC and Standard Chartered retaining the strongest presence in the region, Asean banks must develop and meet international standards, and achieve similar levels of penetration to the foreign big boys. According to the ADB, the Asean banks that are currently in the strongest position to do so are Maybank of Malaysia, Thailand’s Bangkok Bank and United Overseas Bank from Singapore.
