message from the secretary treasurer - aba · we hope you have greatly benefitted from the webinar...

ABA Newsletter March 2019

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Message from the Secretary Treasurer

Dear Colleagues,

WehavesuccessfullyheldthefirstwebinaroftheAML/CFTWebinarSeries2019jointlyorganizedbyABAandthe

FintelektAdvisoryServices.

Weextendourgratitudetotheexpertswhogenerouslysharedtheirtimeandknowledgewithallparticipants.Wehope

youhavegreatlybenefittedfromthewebinarandwestronglyencourageyoutoregisterinthenextwebinarinMay.

OurmemberbankfromthePhilippines,RizalCommercialBankingCorporation(RCBC)ishostingaMicrofinance

AppreciationCoursewithitsmicrofinancearm,RIZALMicrobank.Detailsoftheprogramcanbefoundontheinsidepagesof

thenewsletter.

Regularfeatureslikeupdatesandactivitiesfromamongourmemberbanksarealsoincludedinthisissue.Wehope

youfinditinformativeandinsightful.

Ifyouwishtocontributetothenewsletter,[email protected]

Thankyouandbestregards

ErnestLin

Secretary-Treasurer

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Table of ContentsTrainings & Programs ............................................................................................................................................................ 3ABAandFintelektSuccessfullyHoldtheFirstWebinaroftheAML/CFTWebinarSeries2019MicrofinanceAppreciationCoursejointlyhostedbyRizalCommercialBankingCorp.andRIZALMicroBankonJune10-11

News Updates .......................................................................................................................................................................... 4MarchisgoingtobeahugemonthfortheworldeconomyPhilippinePesoSurprisestoBecomeAsia’sBestCurrencyHelpingfinancialsectortobemoresustainablewithnewinitiativeABASecretariatOfficerMeetswithRCBCExecutivesABAreleasesChairman’sReflection2014-2018

Special Feature ....................................................................................................................................................................... 9Digitisinginvestmentsuitability

Among Member Banks ......................................................................................................................................................... 11BankofEastAsia-BEAhelpsraiseHK$1.8millionfortheTWGHsTeenCafeYouthMentalHealthPromotionProjectStateBankofIndia-SBIreportsfraudsofRs7,951crorein9monthsofFY’19MitsubishiUFG-Japan’sMUFGagreestobuyGermanlenderDZBank’saviationfinancearmfor710billionyenSMBC-SMBCtapsIndustry4.0forexpansionMaybank-Malaysia’sMaybankpostsbestquarterlyprofitin2years,butflagsrisksRCBC-RCBCleadsfinancingforinfrastructureprojectsPNB-PNBraisesP8.2billionfromLTNCDissuanceDBSBank-DBSbanklaunches“robo-investor”toappealtoinvestorslookingforlowmaintenanceinvestmentsUnitedOverseasBank-UOBandOctoRockettohelpSMEsinAseanapplyforfinancingBankofTaiwan-BankofTaiwanopensrepresentativeofficeinManilaFubonBank-TaipeiFubonbankBankandFubonIinsurancebecomemostexpansiveTaiwanesecompaniesinVietnamMegaBank-MegaBanktohirehundredsE.SunBank-NECdeliversfacialrecognitionsystemforTaiwan’sE.SUNCommercialBankBangkokBank-BangkokBanklaunchesWesternUnionspeedycashservice

Banking and Finance Newsbriefs ........................................................................................................................................ 15HongKongcentralbankchiefNormanChantoretireinOctIndia’sGDPtogrowatslowestpacein5yearsinFY19BankIndonesiaMullsAccumulatingGlobalSukukasShariahBufferIranmergingmilitary-linkedbankstostabilizesectorJapan’seconomyimprovingbutfacesrisksfromabroad:gov’tMalaysia’seconomygatherspaceinQ4onimprovedexportsBudgetchiefBenjaminDioknonamedBSPgovernorMASnamedcentralbankoftheyearTaiwanintentonimprovinganti-moneylaunderingscoreThailandtobuy$318mlnworthofnewsharesinbankmerger-financeministerVietnambanks’profitabilityimproves

Publications .......................................................................................................................................................................... 19TheFutureofWork:RegionalPerspectivesStrengtheningtheEnvironmentalDimensionsoftheSustainableDevelopmentGoalsinAsiaandthePacific:ToolCompendiumWorldBankAnnualReport


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ABA and Fintelekt Successfully Hold the First Webinar of the AML/CFT Webinar Series 2019

ThefirstofthefourwebinarsscheduledtotakeplacethisyearaspartoftheAML/CFTWebinarSeries2019jointlyorganizedbytheABAandtheFintelektAdvisoryServices,wassuccessfullyheldonFebruary21,drawingtheparticipationofmorethan100representativesfrombanks–bothABAmembersandnon-members-aroundtheAsia-Pacificregion. Focusingonthetopic“TheRoleofAMLCompliancein Correspondent Banking”, the initial seminar featuredMr.Charan Rawat, Head of Compliance at Rabobank India, astheguestspeaker,andwasmoderatedbyMr.ShirishPathak,ManagingDirectoratFintelektAdvisoryServices. Duringthecourseoftheone-hourwebinar,Mr.Rawatansweredsomeof thequestionssurrounding the topic.Theseincludedthefollowing: Why is Correspondent Banking Considered Risky? -Mr.Rawatnotedthatcorrespondentbankingisriskyduetothefollowingreasons:(a)Correspondentbankhasnovisibilityontheendclientsortheirbusiness;(b)Itreliesoncommunicationand confirmations provided by the respondent banks; (c)Reliance on certifications provided by respondent bank; (d)Lack of familiarity with business model, client base, clientCDDstandards,monitoringactivitiesattheendofrespondentbank; (e) Principle to Principal Transactions between bankstendtocreateafalsesenseofsecurity;andPresenceofNestedAccounts. What are some of the inherent AML risks that banks should factor in while managing their correspondent banking relationships? -Mr.Rawat identified the inherentAMLrisksto include the following: (a) Inadequate appreciation andunderstandingof thebusinessofRespondentBank;(b)Risksassociated with products, services, client profile, geographiclocations and attendant risks arenot factored inperiodically;(c) Lack of visibility on underlying transactions; (d) AMLprogramme is not tailored to address correspondent bankingmatters;and(e)Transactionmonitoringisinadequate–fartoohighfalsepositivesoftoofewalerts.

What are some Key Learnings for Banks from Past Cases? -Mr.Rawat outlined some key learnings thatBankscandrawfromactualpastcases,includingthefollowing:(a)Asharp focusonpolicies, procedures, training,monitoring andauditingwillhelpavoidexpensiveregulatoryaction;(b)Learnfrommistakes of others, continuously update your processesand challenge your own processes/monitoring practices toidentifypossible loopholes; (c)Anend-to-endvisibility introtransactions and customer details will help avoid “siloedapproach”tobankingingeneral;and(d)Thereisnosubstituteforeternalvigilance. Thenextthreewebinars–lastingonehouroneeach-willaddressotherkeyAML/CFTchallengeswithinAsia.Theywillfeaturepractitionersaswellassubjectmatterexpertsandprovide a convenient virtual learning opportunity for AMLcomplianceofficersfromthebankingindustryinAsia. Webinars2,3and4arescheduledasfollows:Webinar 2 - May 8WhyContinuousMonitoringisCriticalforTrade-BasedMoneyLaundering

Webinar 3 - July 10 CustomerDueDiligenceChallengesandBestPractices

Webinar 4 - December 4NewPaymentSystemsandInherentAMLRisks

Formore information on the webinar’s content andfor registration, please visit http://fintelekt.com/webinars.Participationisfreeofcharge.

ABOUTFINTELEKT Fintelekt(www.fintelekt.com)specializesinresearch,consulting and education in banking, financial services and

Trainings & Programs

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ABA Newsletter March 2019insurance, across India, Sri Lanka, Nepal and Bangladeshand other countries in South EastAsia. It produces industryresearch, fosters dialogue and creates opportunities for

RizalCommercialBankingCorporation(RCBC)anditsmicrofinance armRIZALMicrobankare jointlyhosting aMicrofinance Appreciation Course on June 10-11, 2019 inMakatiCity,Philippines. The Microfinance Appreciation Course is beingconductedaspartoftheABA’sShort-termVisitingProgram.The primary aim of the Short-Term Visiting Program is toprovide participating banks the opportunity to study andundergo training on specific aspects of the operations andfacilitiesofthemoreadvancedhostbanks.Theideaistoenablethevisitorstoenhancetheirtechnicalskillsandknowledgeinspecificareasofbankingoperationsinthedistinctandpeculiarsocial,economicandbusinessenvironmentofthehostcountry.Italsoallowsparticipantstogainfirst-handknowledgeoftheoperations, systems and work procedures of the host bank’svariouslinedepartmentscoveredbytheprogram. The Microfinance Appreciation Course hopes toprovide participating banks, particularly those who areinterestedtoengageinmicrofinanceasabusinessinitiative,theopportunity to learn from the experience, best practices, andexpertiseofRCBCandRIZALMicroBank.TheparticipantsandtheRCBCexpertscanexchangeviewsandshareknowledgeonmicrofinanceasonebusinessactivity thatABAmemberscanengagein,inordertosustainandgrowtheirbankingoperations.Acoursesyllabuswillbeavailablesoon. NOPARTICIPATIONFEE ThereisnoparticipationfeeforABAmemberbanksattendingtheprogram.However,non-memberbankswillbechargedaminimalfeeofUS$200perparticipant. All participants shall cover their airfare and hotelaccommodation.

PROPOSEDVENUEandACCOMMODATION TheworkshopwillbeheldattheRCBCheadquarters.A list of recommended hotels will be sent to participantsseparately.

REGISTRATION Interested members may request a confirmationform from theABASecretariatvia email at [email protected],2019.

Microfinance Appreciation Course to be jointly hosted by Rizal Commercial Banking Corp. and RIZAL MicroBank on June 10-11

knowledge sharing between senior executives from banking,financialservicesandinsurance.

News Updates

Marchisshapingupaspivotalfortheworldeconomy. The comingweeks are set to offer clarity on aUS-China trade deal,Britain’s fatewithin theEU and any signsthat China’s economy is turning around. At the same time,USPresidentDonaldTrumpismullingareportthatmayleadhimtoplacetariffsonEuropeanandJapanesecars,whiletheFederalReserve,ECBandBankof Japanwilldecidepolicy.Andthelistgoeson. The US is eyeing a summit as soon as mid-Marchbetween Trump and his Chinese counterpart, President XiJinping, withWhite House economic adviser Larry Kudlowhailingapotentially“historicdeal.”Ifanagreementisreached,the reliefmaybeshort-lived ifBritaincrashesoutof theEUonMarch29withoutadivorcedeal,compoundingabroaderslowdownacrosstheregion. MarchisalsothemonthforChina’sannualNational

March is Going to be a Huge Month for the World Economy


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People’s Congress, when the rubber-stamp parliament will sign off on thegovernment’s economic plan for theyear. Thecenterpieceannouncementwill be the annual growth target. SomeeconomistsexpectChina to seta lowergrowth target of either about 6%, or6-6.5%—down fromaround6.5%forthepasttwoyears. KeyChinese datawill also bereleasedover comingweeks, indicatingwhetherornottheworld’ssecond-largesteconomyisrespondingtopolicyeasingaftermonthsofstimulus.March data will need to start showingChina’s economy is recovering,” saidAliciaGarciaHerrero,chiefAsiaPacificeconomistatNatixisinHongKong.“Ifnot,weshouldstartworrying.”

ROCKY START How events play out will dictateinvestorsentimentaftera rockystart tothe year. The International MonetaryFund in January cut its forecast for theworld economy,predicting itwill growat the weakest pace in three years in2019. Risks were evident in fourth-quarter data showing the US economywas steadier than thought, growing by2.9% annualized, though a buildup ofinventories means the outlook is farfrom certain, according to BloombergEconomics. “The economy appears to have

dodged a bullet at year-end -but the coast is not clear,”BloombergUSeconomistsledbyCarlRiccadonnawroteinanote.

Economic Times

News Updates

IMF in January cut its forecast for the world economy, predicting it will grow at the weakest pace in three years in 2019.

Philippine Peso Surprises to Become Asia’s Best CurrencyBy David Finnerty, Bloomberg

The Philippine peso has defied a yawning current-accountdeficittoemergeasAsia’sbest-performingcurrencyinFebruary.Anditmaycontinuetosurpassitspeers. Peso bulls say record remittances, rising investmentandabuoyantdomesticeconomywillpropelfurthergains inthecurrency.Easinginflationcouldalsolendahand,ashigherrealyieldsburnishtheappealofPhilippinebonds. ThepesoisamongAsia’sbiggestturnaroundstories,asthecurrencybouncedbackfroma13-yearlowafteraslewofeconomicreformsanda$170billioninfrastructurespending

planrevivedsentiment.Proactivecentralbankpolicyhasalsohelpedwinoverskeptics. “The peso has been stronger recently and couldcontinuetooutperformintheregion,amidsustainednetforeignportfolio investments on awidely expected further decliningtrendoflocalinflation,”saidMikeRicafort,economistatRizalCommercialBankingCorp.inManila. The Philippine currency strengthened 0.8 percent inFebruaryto51.70perdollar,thebestperformanceamongAsiancurrencies.Ithasclimbedsincethestartoftheyear,asapauseinFederalReservetighteningandeasingglobaltradetensionsfueleddemandfordeveloping-nationassets. Thepesowasamongthehardesthitintheemerging-market sell-off last year, tumbling to a 13-year lowof 54.41inOctober as investorspunished economies running current-accountdeficits. Technicalsback thecase for furtherpesogains.Thedollar-peso currency pair remains in a bear trend, hoveringaboveinitialsupportat51.90,itsFeb.13low.Thepair’sslow

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stochastics,amomentumindicator,signalsitmaydropfurtherinthenearterm,withthe%Dlinereading43andfalling. Sentiment toward the peso has recovered even afterthe central bank forecast the nation’s current-account deficitwillwidento2.3percentofgrossdomesticproductin2019,thebiggestshortfallsince2001.Therecentreboundincrudepricesthreatenstoworsenthegap,asthePhilippinesimportsalmostallitsoilrequirements. Investors are betting on the peso after foreigninvestment into Philippine stocks and bonds recorded a netinflow of $763million in January,more than four times thelevelayearago.Remittances fromFilipinosworkingabroadclimbedtoanall-timehighof$2.85billioninDecember. InflationdatadueMarch5couldprovidemorefodder

forpesobulls.Consumer-pricegainsmayhaveeasedtoaone-yearlowof4.0percentinFebruary,accordingtoaBloombergsurvey of economists onMarch 1 afternoon, and within thecentralbank’stargetbandof2to4percent.Pricepressureshavewanedsincetouchinganine-yearhighinSeptember,thankstogovernmentmeasurestoboostfoodsupplies.

Global Outperformer Philippineswasamongtop10best-performingglobalsovereignbondmarketsinFebruary. This augurswell forpesogovernmentbonds,whichgained 0.4 percent in February, the seventh-best performeramong 34 sovereignmarkets tracked byBloomberg.Waningprice pressures will boost real yields on Philippine debt,particularlyas thecentralbank remains inhawkishmode fornow. Ten-year peso bonds offer a real yield of 2 percent,comparedwith about 5 percent for Indonesian securities andIndiandebt. Butforpesobears,theoutlookislesscertain. “Peso outperformance is unlikely to persist,” saidDivyaDevesh,headofAseanandSouth-AsiaFXresearchatStandardChartedBank inSingapore.“Monthly tradedeficitsarelikelytopersist,leadingtostrongdollardemandonshore.Inaddition,monetarypolicyislikelytoremainunchangedin2019,withrisksskewedtowardsratecuts.”

News Updates

Helping Financial Sector to be More Sustainable with New InitiativeBy Sue-Ann Tan, The Straits Times

Financialinstitutions,non-governmentalorganizationsandacademicswillworktogetherunderanewinitiativetohelpbusinessesbemoresustainable. TheAsiaSustainableFinanceInitiative(ASFI),whichwas launched on January 21 at the Parkroyal on Pickeringhotel, aims to help shift the region’s financial flows towardssustainableoutcomes. Itwill bring together the finance industry, academiaand science-based organizations to help Singapore-basedfinancial institutions operating in the region to deepen theirexpertiseinsustainablefinance. The World Wide Fund for Nature (WWF) is thesecretariat and knowledge partner.Other knowledge partnersinclude theAsia InvestorGroup on Climate Change, United

NationsEnvironmentProgramme-FinanceInitiativeand theNationalUniversityofSingapore. TheAssociationofBanksinSingapore,LifeInsuranceAssociation, Institute ofBanking andFinanceSingapore andthe Singapore Exchange Regulation are among the financesectorpartners. An ASFI spokesman said: “The financial sector iscrucial in creating resilient and sustainable economic growththroughitsabilitytoinfluencecompaniestoadoptbestpracticesandtodirectfinancialflowstowardssustainabledevelopment. “As a key global financial hub, Singapore is animportantconduitforcapitalflowsintotheAsiaregion,andassuchitsfinancialinstitutionshavesignificantpotentialtoshaperesilientregionaleconomies.”


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Sustainable finance is also key to addressing theregion’s increasing vulnerability to climate change, thedegradation of land and ocean ecosystems, labor and humanrights,andwaterrisk,sheadded. The initiative will focus on helping financialinstitutions better understand and incorporate environmental,social and governance (ESG) risks and opportunities intodecision-makingprocesses. It will assist partners in devising standards andcertificationschemesandhelpinstitutionsunderstandmaterial,environmentalandsocialissuessotheycanpriceriskandvaluecompanies. TheASFIwillalsobringresearchandinnovativetoolsso finance institutions can develop viable green solutions tocreateanactualimpactontheenvironmentandsociety. MsIndraneeRajah,Minister inthePrimeMinister’sOffice and SecondMinister for Finance and Education, saidat the launch: “Financial institutions play an important rolein influencinghowcapital is allocated to economic activitieswith sustainable development outcomes. This will facilitatedecision-making... thatdeliversfinancialperformanceaswellaspositiveimpactsonsociety.” She added that institutions here have significantpotentialtocatalyzesustainablefinanceintheregion. “Whilewearestillattheearlystages...wehaveseensome success in encouraging the use of debt capital marketfinancingtowardssustainableprojects.”

In2017,developerCityDevelopmentsLimitedissuedthe first green bond in Singapore, and DBS Bank partneredImpactInvestmentExchangeontheworld’sfirst listedsocialbond,anUS$8million(S$10.9million)Women’sLivelihoodBond. Ms Indranee said Singapore can advance deeperESG integration within financial institutions and implementcrediblestandards.ThereshouldalsobedeepenedresearchanddevelopmentinESGproductsbybuildingcapabilities. TheMinistryoftheEnvironmentandWaterResourcesandMonetaryAuthorityofSingaporewelcomedtheinitiative:“Partnerships and collective action are essential to achievingsustainabledevelopment.” MsJeanneStampe,headofWWF’sAsiaSustainableFinance team and founder ofASFI, said: “Today’s pressingenvironmentalandsocialchallengesthreatenthe...stabilityofAsianeconomies. “By working... alongside other science-basedknowledgepartners,wecan facilitateanorderly transition toeconomiesthatdeliverwell-beingtoallpeoplewhileprotectingthe natural capital on which all businesses and societiesdepend.”

News Updates

From left: Ms Lydia Wee, deputy chief executive of the Institute of Banking and Finance Singapore; Mr Nicholas Hadow, chairman of the Investment Management Association of Singapore; Mr Pierre-Emmanuel Brard, chief investment officer of AXA Insurance Singapore and ASFI representative for the Life Insurance Association; and Mrs Ong-Ang Ai Boon, director of the Association of Banks in Singapore at the Asia Sustainable Finance Initiative (ASFI) launch.ST PHOTO: JONATHAN CHOO

ABA Secretariat Officer Meets with RCBC Executives

Ms.ChristinaAlvarez, SeniorVicePresident,Head,CorporatePlanningGroup,RizalCommercialBankingCorp.(RCBC) (center) andMr. Raymundo C. Roxas, President ofRizalMicrobank, themicrofinance arm of RCBC (left),metwithABADeputySecretaryMr.AmadorHonradoJr.(right)onFebruary4todiscussinitialpreparationsfortheMicrofinanceWorkshop to be conducted by Rizal Microbank for ABA

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memberbanksonJune10-11attheRCBCheadquartersinMakatiCity,Philippines. The workshop aims to providememberbanks,particularlythosewhoareinterestedtoengageinmicrofinanceasabusinessinitiative,theopportunitytolearn

from the experience, best practices, andexpertiseofRCBCandRizalMicrobank,which are already successfully engagedinmicrofinance operations. Through theworkshop, the ABA hopes to provideanothervaluableopportunityformembers

News Updatestoexchangeviewsandshareexperiencesonmicrofinanceasonebusiness activitythattheycanengagein,inordertosustainandgrowtheirbankingoperations.

ABA Releases Chairman’s Reflection 2014-2018

ABA recently released the Chairman’s Reflection2014-2018 which summarizes the activities undertaken byImmediatePastChairmanMr.DanielWuduringhisfour-yeartermfrom2014to2018. Mr.DanielWu,PresidentofCTBCFinancialHoldingCo.,wasfirstelectedasChairmanoftheABAduringthe31stABAGeneralMeetingandConferenceheldonNovember19-20,2014 inMuscat,Oman, takingover fromMr.LorenzoV.Tan, then President and CEO of Rizal Commercial BankingCorporation (RCBC) from the Philippines. Prior to that,Mr.WuservedasABAViceCharimanfrom2012-2014. Two years later, during the 33rd ABA GeneralMeetingandConferenceheldonNovember10-11,2016inHaLongBay,Vietnam,Mr.Wuwasre-electedasABAChairman,makinghim thefirst tobevoted to theposition fora secondterm-andmarkingamilestoneinthehistoryoftheAssociation. His two terms at the helm of the ABA saw him

building on the achievements of his predecessors whilemaking his own important contributions to the progress anddevelopmentoftheAssociation.InhisValedictoryAddressatthe35thABAGeneralMeetingandConferenceonNovember15-16, 2018 inMaldives, he expressed his deep gratitude tothe generalmembership for their cooperation and support ofthe projects and programs that his administration during hisfour-yearincumbency.“Allyourcooperativeendeavors-whichhavebeenthehallmarkofABA-havecertainlymademytaskasChairmanmoreworthwhile,rewarding,andenjoyableinsomanylevels,therebyprovidingmewithamemorablefour-yeartenure.Withoutyourcollaboration, thevariousprogramsthatwesetouttodoat thestartofmytermwouldhavenotbeenachieved,”Mr.Wutoldmembers. TheChairman’sReflectioncanbedownloaded fromtheABAwebsitehttps://www.aba.org.tw/


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For private banksand wealth managers,investmentsuitabilityisahotregulatory topic and shouldbe at the heart of front-office digitization efforts.Increasingly, supervisorsare expecting private banksand wealth managers tostrive for good customeroutcomes and demonstratethat their decision-makingprocessesarecenteredonanunderstandingofcustomerneeds. RecentregionaldevelopmentsincludetheintroductionofregulationontheofflinedistributionofcomplexproductsbytheHongKongMonetaryAuthorityinOctober2018,andtheFinancialServiceAgencyofJapan’sPrinciplesforCustomer-Oriented Business Conduct, which were finalized in March2017. Although regulatory specifics differ betweenjurisdictions, the underlying fundamental principle remainsconsistent: an investment product ought to be aligned to acustomer’s risk profile and appetite. In instances where theproductisconsideredtobeunsuitable,suchaswherethereisahighprobabilityofunacceptablelosses,theobligationisonthebankstocontrolthesellingprocessandprotectthecustomer. Matchingaproducttoacustomer’sneedsisthecorerequirement. Forprivatebanksandwealthmanagers,theregulatorypressuresarepushingplayerstoadoptamoreproactivestancewhereadeepandongoingunderstandingofthecustomerdrivestheselectionofinvestmentproducts. Todo this,privatebanksandwealthmanagershavetoaddressfivekeythemes,eachposingtheirownuniquesetofopportunitiesandchallenges:

1. Enabling effective client suitability assessment In order to enable effective client suitabilityassessment, the development and rollout of an InvestmentProfile Questionnaire (IPQ) during the client profiling phase

(see: “Five stages of theinvestment suitabilityprocess”) will need totake into consideration thevolume of information thatis required for an operatingmodel to apply acrossdifferentjurisdictions,whererequirementsondatacapturemay diverge. An effectiveIPQ is one which supportsa single operating modelwhereclientinformationcan

becomparedacrossvariousclient segmentsand jurisdictionsto build a deeper understanding of client risk appetites andcorrespondingproductsuitability.

Thefive stages of the investment suitability processincludethefollowing:

Client profiling Thefirst stageentailsunderstanding theclient’s riskprofileandappetite.ThisistypicallyassessedthroughtheuseofanIPQthatcoversdetailssuchastheclienttype,investmentobjectives, risk appetite, investment time horizon, and otherkeyclientmetrics.

Product profiling Thesecondstageentailsunderstandingtheproduct’srisk profile. This includes assessing the associated risksof each product type, including its time horizon, liquiditycharacteristics, counterparty risks, investment objectives, aswellasotherspecialfeatures.

Matching The third stage focuses on assessing the suitabilityof a product for a specific client to ensure that the client’sriskprofilematches theproduct’s riskprofile. If thesedonotmatch,thefocusthenshiftstowardsmitigatingtheriskthroughappropriatedisclosureoracknowledgmentfromtheclientofamismatch.

Special Feature

Digitising Investment SuitabilityBY CHRISTIAN GILMOUR, Asian Banking and Finance

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ABA Newsletter March 2019Disclosure At this stage, the client is informed about the riskof the product. If a riskmismatch has been identified in thepreviousstage,theremayalsobearequirementfortheclienttoacknowledgethattheyacceptthemismatch.

Maintenance Asmarketconditionsandcircumstancesevolve,thereis a need to put in place the necessary controls and ensureongoingandregularassessmentsofthesuitabilityofproductstoclients.

2. Building a comprehensive product data suite Buildingacomprehensiveproductdatasuiteiscriticalto ensure that product attributes are consistently capturedacross locations and asset classes, whilst facilitating bettercomparability between different product types, and enablingprivatebanksandwealthmanagers tooffer abetter rangeofproductstotheirclients.Althoughmorecomplexassetclassesmaypresentchallengesintermsofdatasourcing,effectivedataladderingcanalsohelptoovercomesomeoftheseissues.

3. Customizing product offerings Technologyisakeyenablerforprivatebanksandwealthmanagerstooffertheirclientscustomizedproductofferings.Bymatching data from the client profiling and product profilingstagesoftheprocess,privatebanksandwealthmanagerscanobtaingreaterclientinsightacrossmultipleparallelsandofferenhancedproductofferingsthatarecustomizedtotheirclient’srequirements.

4. Standardization of disclosure requirements Disclosure requirements differ significantly acrossjurisdictions,withcertainjurisdictionsallowingthedistributionof products with high risk profiles to clients with low riskprofilessolongasadisclosureoftheassociatedriskhasbeenacknowledgedbytheclient.Thestandardizationofdisclosurerequirementsis thereforecritical toensureconsistencyacrossriskdisclosurestoclients.Inaddition,bysettingupstandardizedplatforms to automate disclosures, private banks and wealthmanagerscanalsoensureminimaldisruptionstotheiroverallsalesprocess,whileretainingaclearlydocumentedaudittrailfortheirfuturereference.

5. Ensuring consistent data capture Consistent data capture protocols across the entiresuitability process is crucial to facilitate ongoingmonitoringandassessment toensure that there remainsa suitablematchbetweenaclient’sriskprofileandaproduct’sriskprofile,evenas both continually evolve.This requires the use of analyticplatformsthatarecapableofefficientlyconsumingandassessingdata. In contrast to legacy platforms where single positionassessmentswerethefocus,newtechnologicalplatformsnowenablefirstandsecondlinecontrolstomovebeyondsample-based analysis, enabling private banks and wealth managersto leverage entire sets of data for greater accuracy andmorecomprehensiveoversight. Ultimately, regulators will not only be watchinginvestment suitabilitybut also thedeliveryofgoodcustomeroutcomes. Ensuring that firms are not serving the wrongtypesofcustomersisacontinuingregulatorypriority.Robustproceduresforunderstandingcustomeridentityandassociations,ongoing monitoring and analysis of transactions, and timelyidentification,andescalationandactiononsuspiciousmatterscontinuestobetopofmindforregulators.

About AuthorChristian Gilmour

Christian is an Executive Director, Consulting at Deloitte Southeast Asia. He is a seasoned banking executive with a global track record of motivating and leading teams to deliver complex, time pressured transformations. He has hands on expertise in

Investment Banking and Private Banking/Wealth Management spanning business, product, change and client management developed over a decade in Barclays Capital and Wealth. He also has a deep end to end understanding of the full product set for the institutional/private client segments.


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BEA Helps Raise HK$1.8 Million for the TWGHs Teen Cafe Youth Mental Health Promotion Project - TheBankofEastAsia,Limited(BEA)hasreaffirmeditscommitmenttothecommunitybysupportingtheTeenCafeYouthMentalHealthPromotionProject(“TeenCafe”orthe“Project”)managedbyTungWahGroupofHospitals(“TWGHs”).Tomaximizetheimpactofitssupport,BEAinvitedcustomers,businesspartners,andotherstojointheBankinmakingadonationtotheProjectinsteadofsendingflowersorothergiftstotheBankontheoccasionofits100thAnniversary.AsattheendofJanuary2019,approximatelyHK$1.8millionhadbeenraised,whichwillenableTWGHstohelparound600adolescentsandyoungadultsannuallyforatleastthenexttwoyears.TheBankofEastAsiaCharitableFoundation(BEAFoundation,whichiscelebratingits10thAnniversaryin2019,willmonitortheProjectonbehalftheBank. Dr.DavidK.P.Li,Chairman&ChiefExecutiveofBEAandChairmanoftheBEAFoundation,said,“Sinceitsestablishment,theBEAFoundationhas supportedvulnerable andunder-resourcedmembersofour community, including the childrenand theelderlythroughinitiativesliketheBEAParent-ChildReadingProgramme,theBEA “HighFive”Club,and thePalliativeCare inResidentialCareHomesfor theElderlyProgramme.Aswecelebrateourcentenary,wearepleasedtotaketheopportunitytoextendoursupporttotheyouthofourcommunity.IwouldliketooffermymostheartfeltthankstoeveryonewhohasjoinedusinsupportingtheTeenCafe.Together,wecanensureabrightfutureforthenextgeneration,andforHongKong.”

BEA News Release

Among Member Banks

SBI Reports Frauds of Rs 7,951 Crore in 9 months of FY’19 - StateBankofIndia(SBI)onMarch1saidfraudsamountingtoRs7,951.29crorewerereportedduringthefirstninemonthsof2018-19.AlltheseaccountsbecameNPAsmuchearlierandmostoftheportfolioisalreadyprovidedforwith100percentprovision,SBIsaidinaregulatoryfiling. “Moreover,weprovideadditionalprovisiononnewfraudsineachquartertocoverthegap,ifany,”itsaid. ln,thisconnection,whileallfraudrelatedlaiddownguidelinesarebeingfollowed,resolutionprocessforrecoverythroughDebtRecoveryTribunalandothermechanismisalsounderway,itadded. Thenation’slargestlendersaidthefirstquarterreported669casesoffraudulentactivitiesamountingtoRs723.06crore,thesecondquartersaw660casesinvolvingaRs4,832.42croreandthethirdquarterreported556casesamountingtoRs2,395.81crore.

Business Today India

Japan’s MUFG Agrees to Buy German Lender DZ Bank’s Aviation Finance Arm for 710 Billion Yen - MitsubishiUFJFinancialGroupInc.agreedtobuyDZBank’saviationfinancedivisioninoneofitsbiggestacquisitionssinceitwascreatedin2005. TheassetsMUFGboughtfromGermany’ssecond-largestbank,heldbyitssubsidiaryDVBBank,includealoanportfolioof5.6billioneuro(710billionyen)aswellastheunit’semployeesand“partsoftheoperatinginfrastructure,”accordingtonewsreleasesfrombothbanksonMarch1. ThedealisthelatestforJapan’sbiggestbankinaspateofacquisitionsabroadasitseekstomakeupfordiminishingreturnsinacountrythat’sbesetbyrock-bottominterestratesandsloweconomicgrowth. MUFG’srecenttransactionsincludeitspurchaseofanadditionalstakeinPTBankDanamonIndonesiaandanagreementtobuyCommonwealthBankofAustralia’sassetmanagementunit.Atthesametime,MUFGhasbeensellingholdingsincompaniessuchasStandardLifeAberdeenPLCandBrazil’sBancoBradescoSAtoimprovetheefficiencyofitsinvestmentsandfreeupcapital. “It’samoveintherightdirection,”saidToyokiSameshima,aseniorbankanalystatSBISecuritiesinTokyo.“MUFGhasbeenshiftingassetstomoreprofitableareas.Myoverallimpressionispositive.”

Japan Times

12


SMBC Taps Industry 4.0 for Expansion - JapanesemultinationalbankingandfinancialservicescompanySumitomoMitsuiBankingCorporation(SMBC)iskeentoexpandinThailandtocashinontheIndustry4.0initiativesettoattractmoreforeigninvestment. DeputyPrimeMinisterSomkidJatusripitaksaidKoichiMiyata,presidentofSMBCtoldhimonFebruary 6 thatThailand 4.0would be a significant driver of industrial development attractingforeigninvestors. TheThailand4.0policywillenhacethecountry’sroleandattractexistingmanufacturerstoexpandtheirinvestment,whileSumitomoisreadytosupportJapaneseinvestment,Mr.Miyatasaid. Mr.Somkid saidSMBC is alsowilling toprovide information to thegovernment,which is scheduled tohold itsnextroadshowinSendaiandHokkaidobeforethegeneralelection. HereaffirmedtotheJapaneseeconomythattheThaieconomyisexpectedtogrow4%thisyear,downfromanestimated4.2%in2018.

Bangkok Post

Among Member Banks

RCBC Leads Financing for Infrastructure Projects-Yuchengco-ledRizalCommercialBankingCorp.(RCBC)continuestotaketheleadinfinancingkeyinfrastructureprojectsnationwideasthenationalgovernmentrampsupmassiveinfrastructurespendingundertheBuildBuildBuildprogram. Thecountry’s10thlargestbankintermsofassetsisthebiggestlendertotheP19billionprojectfinancefacilityofaunitofinfrastructuregiantMetroPacificInvestmentsCorp.(MPIC). RCBCdeputy chief executiveofficerEugeneAcevedo said theproceedsof the15-year term loan facility extended toCebuCordovaLinkExpresswayCorp.(CCLEC),anindirectsubsidiaryofMPIC,wouldpartiallyfinancethefirstpublic-privatepartnership(PPP)outsideMetroManila. ThisisthefirstbridgeventureofMPICthatcontrolsMetroPacificTollwaysCorp.(MPTC).Theloanfacilitywassignedlatelastyear. “WeareexcitedaboutthisopportunitytobeinvolvedinafinanciallyviableprojectthatwillbringsignificantimpactintheeconomyofCebu,”Acevedosaid.

Philippine Star

Malaysia’s Maybank Posts Best Quarterly Profit in 2 years, but Flags Risks -Malaysia’sMalayanBankingBhd(Maybank)beatexpectationswitha9.1percentriseinquarterlynetprofit,itshighestprofitintwoyears,asIslamicbankingincomesoaredandnetinterestincomegrew. ButtheSoutheastAsiannation’slargestlenderbyassetsflaggeditsprofitabilitywouldbeundersomestrainthisyearduetohighercosts,andalsosaiduncertaintyinlong-termdomesticeconomicpolicywasimpactingitsclients. Netinterestmargin-akeymeasureofbankprofitability-fell3basispointsin2018to2.33percentandthebankexpectsafurthercompressionof3-5basispointsthisyear,pressuredbypotentialdepositcompetition. WhilethebankexpectsstableeconomicgrowthinMalaysia,itsbiggestmarket,itnoteduncertainlongertermeconomicpolicywasstillaconcernforthemarket. “Manyofourclients(whoare) institutional investors...would like toknowabitofclarityonthemediumto longtermeconomic policies -where dowewant to go,which sectors arewe focused on,what arewe going to do about creating newemployment,whatarewegoingtodoaboutcreatingabetterenvironmentfornewinvestments,”GrouppresidentandCEOAbdulFaridAliassaidatthebank’sresultsbriefing.

Reuters


13

Among Member Banks PNB Raises P8.2 billion from LTNCD issuance - PhilippineNationalBank(PNB)raisedP8.22billionviatheissuanceoflong-termnegotiablecertificatesoftimedeposits(LTNCDs)due2024aspartofaseriesoffundraisingactivitieslinedupbythebank. Thedebtinstrumentwithatenoroffiveyearsandsixmonthsfetchedacouponrateof5.75percentperannum. PNBpresidentandchiefexecutiveofficerJoseArnulfoVelososaidthefundraisingactivitywouldhelpextendthebank’smaturitydebtprofileandraiselong-termfundstosupportitsloangrowth. “Thisisastrategicexerciseforusaswecontinuetogrowourloanportfolio.Raisinglongtermfundingatattractivelevelsoffersourinvestorsanopportunitytosupportourgoals,whileallowingustoalsoprovidecost-competitiveloanstoourclientswhowouldliketogrowalongsideourstrongPhilippineeconomy,”Velososaid. ItwasthelargestLTNCDissuancebyPNB.Itwas2.7timesoversubscribedastheinitialplanwastoraiseonlyP3billion. “Thisisduetostronginvestordemandfrombothretailandinstitutionalinvestors,”hesaid.

Philippine National Bank

DBS Bank Launches “Robo-Investor” to Appeal to Investors Looking for Low Maintenance Investments -Singapore’s largestbankDBSunveileda“robo-investor”serviceonFebruary28 toallowcustomers tomanage their investmentportfolio througha “robot”whichautomates investmentprocessessuchasrebalancing,executingtradesandmonitorsinvestmentperformances. CalleddigiPortfolio,theservicewasmadelivetothebank’sWealthcustomersearlierthisweekandisscheduledtoberolledouttoallofDBS’customersbytheendofthisyear.Thebankhas5.2millionretailcustomers,ofwhichthreemillionmaketheirbankingtransactionsonline. Theserviceautomatesinvestmentprocessesandcreatesaninvestmentportfoliobasedontheclient’sriskappetite,varyingtheproportionofequity,fixedincome,andcashinvestedintounittrustschosenbythebank’sinvestmentteam. AccordingtoMrLimSoonChong,regionalheadofinvestmentproductsandadvisoryatDBSconsumerbankinggroupandwealthmanagement,onlyonein10Singaporeanshavemadeinvestmenttransactionsinthepast12months. MrLimattributedthelowinvestmentactivityamongSingaporeanstothelackoftime,highupfrontfees,andtheinertiafacedwhenfillingupformswhichcanbetedious.ThemanychoicestomakeondecidingonaninvestmentproductalsoputsoffSingaporeans.

DBS Bank News Release

UOB and OctoRocket to Help SMEs in Asean Apply for Financing -UNITEDOverseasBank(UOB)andOctoRocket.asia(OctoRocket),abusinesstobusinesse-commerceplatform,announcedthattheyhavesignedaMemorandumofUnderstanding(MOU)toenablesmallbusinessesinAseanonOctoRockettoapplyforfinancingquicklyandeasily. OctoRocket, a joint venture launched in January by Singapore Press Holdings (SPH) and Y3Technologies,enablescross-bordertradebetweensuppliersandbuyersfromSingapore,Indonesia,Malaysia,ThailandandVietnam.Forastart,OctoRocketishelping30suppliersintheregion’spackagedfoodindustrytosellmorethan600typesoffoodproductssuchassnacks,instantnoodles,cannedfood,sauces,condimentsandbeverages. Under theMOU,UOBwillenablesmallbusinesses thatuseOctoRocket forat leastsixmonths toapplyforfinancingdirectlyviatheonlineplatform. Insteadofrelyingonthecompany’sfinancialstatements,theBankwillassesstheapplicant’screditworthinessbasedonitstransactionaldataonOctoRocket,usingacreditassessmentenginedevelopedbyAvatec.ai. Theengineharnessesthepowerofartificialintelligenceandmachinelearningtogaininsightsintotheapplicant’scashflowandday-to-dayoperations,determiningtheapplicant’screditqualityquicklyandwithmorecertainty. ThiswillenabletheBanktocutthetimetakenforloanapprovalsfromanaverageof2.5daystojust15minutes.

Digital News Asia

14


Bank of Taiwan Opens Representative Office in Manila - The Bank of Taiwan (BOT)officiallyopenedarepresentativeofficeinManila,capitalofthePhilippinesonJanuary31aspartofitseffortstohelpTaiwanesebusinessesentertheSoutheastAsianmarket. Duringaspeechattheopeningceremonythatday,BOTChairmanJosephJye-cherngLyusaidtheofficedemonstratesthebrotherhoodbetweenTaiwanandthePhilippinesindicatingthetwosideswillworktogethertocreateeconomicvalue. TherepresentativeofficewassetuptoassistTaiwanesebusinessestakeadvantagesofopportunitiesofferedbyeconomicgrowthinthePhilippines,Lyupointedout. Explainingthestrategiclocationoftheoffice,hesaid“thePhilippinesstandsasacriticalentrypointtotheASEANmarketwithampleopportunitiesforTaiwanbusinesses.” “Ibelievefromthebottomofmyheart,thatthisisthecountry(thePhilippines)weBOTmustbepresentto(make)dialoguedirectlywithclientsintheregion,”Lyusaid. Thebankwillstrengthencooperationwithlocalfinancialinstitutionsandmultinationalbankstocreatewin-winsituations,headded.

Focus Taiwan

Among Member Banks

Taipei Fubon Bank and Fubon Iinsurance become Most Expansive Taiwanese Companies in Vietnam - TaipeiFubonBankandFubon Insurancehavebecome themostexpansiveTaiwanesecompaniesinVietnamafteradecadeofoperatinginthecountry,RichardMTsai,ChairmanofFubonFinancialHoldings,said. Speakingataneventtitled“ADecadeinVietnam”organizedbyTaipeiFubonBankandFubonInsuranceinHCMCityonMarch2tocelebrateadecadeinthecountry,hesaidthebankandtheinsurer,subsidiariesofFubonFinancialHoldings,openedabranchandsetupawholly-ownedsubsidiaryinVietnamin2008. AdecadelatertheyhavebecomethemostexpansiveTaiwanesebankandinsurancecompanyinVietnam,hesaid. “Overthecourseofadecade,theirscaleandbusinesslocationshaveflourished;TaipeiFubonBanknowhasthreebranchesinHCMCity,HaNoiandBinhDuongwhileFubonInsuranceVietnamhasofficesinHCMCity,HaNoi,BinhDuong,andDongNai.” Vietnamoffersademographicdividendanditsdomesticmarkethasimmensepotential,beingoneofthefastestgrowingemergingeconomiesintheworld,hesaid.Thus,thecountryhasakeyroleinFubonFinancialHoldings’bidtoentertheSoutheastAsianmarket,hesaid.

Vietnam News

Mega Bank to Hire Hundreds - Unfazedbyaglobal economic slowdown, state-ownedMegaFinancialHoldingCoonFebruary11announcedplanstohiremoreworkersthisyeartobolstertheirretailbankingoperations. MegaFinancialHoldingCochairmanMichaelChangsaidthattheconglomerateplanstoadd600employeesthisyeartosupportitsconsumerbankingbusiness. Thebanking-focusedcompanypresenteditsplanlastyearandtherestillisampleroomforimprovement,Changsaid. Mega Financial has focused on hiring legal compliance professionals after being fined byUS financial regulators forcompliancefailuresatitsUSbankingbranchesin2016andlastyear,hesaid. Thesituationhasstabilized,asevidencedbyMega’simprovedearningsability,Changadded. Net income reached NT$28.2 billion (US$915.32 million) last year, a 9.5 percent increase from 2017 and the bestperformanceinthreeyears,withearningsofNT$2.07pershare,MegaFinancialdatashowed. MegaInternationalCommercialBank,whichgenerated85.87percentoftheholdingcompany’soverallprofit,aimstohiremoreconsumerbankingemployeestomakeitsretailbankingbusinessasbigacontributorascorporatebanking—itskeyprofitdriver,Changsaid.

Taipei Times


15

Hong Kong

Hong Kong Central Bank Chief Norman Chan to Retire in October HongKong’scentralbankChiefExecutiveNormanChanwillretireonOct.1thisyear,aftercompletingexactly10yearsintherole,agovernmentstatementsaidonFebruary21 Chan, a long servingmemberofHongKong’s civil service, joined theHongKongMonetaryAuthority (HKMA), thecountry’sbankingregulatoranddefactocentralbank,atitsestablishmentin1993,andwasappointedchiefexecutivein2009. HealsoworkedatStandardCharteredbetween2005and2007. “In theaftermathof theglobalfinancialcrisis...Normanhasplayedapivotal role in the internationalfinancial systemreformagenda,”HongKongFinancialSecretaryPaulChansaidinthestatement. Chansaidhefeltnowistherighttimetoretireandspendmoretimewithhisfamily. PaulChanischairingaselectionpanelwhichwillidentifyNormanChan’ssuccessor,thestatementadded.

Reuters

NEC delivers facial recognition system for Taiwan’s E. SUN Commercial Bank - NEC, a firmexpertiseintheintegrationofITandnetworktechnologies,hasprovideditsfacialrecognitionsystemtoTaiwanesebank,E.SUNCommercialBank(E.SUNBank). NECsystemissaidtohelpcreatesafe,secureandconvenientautomatedtellermachines(ATMs)usingfacialrecognition. NECsaidthatE.SUNBank’ssystemsaretheworld’sfirstfacialrecognitionautomationATMswithone-timepasswordtechnology. E.SUNBankhasalreadyinstalledandcommencedoperationoftheATMsatfivelocationsinthecountry. ThesystemsuppliedbyNECusesfacialrecognitionartificialintelligence(AI)enginecalledNeoFace,whichisclaimedtofeaturetheworld’shighestrecognitionprecisionandpartofthefirm’sadvancedbiometricauthenticationtechnologiesBio-Idiom. UsersneedtoinserttheircashcardsandhaveaphotooftheirfacetakenwithacamerainstalledwithintheATM,whenusingthesefacialrecognition-equippedATMsforthefirsttime.

Compelo

Among Member Banks

Bangkok Bank Launches Western Union Speedy Cash Service - BangkokBank,initsmovetobecomeadigitalbankingspecialist,haslaunchedaquick,secureserviceforinternationalpayments.CustomerscannowreceiveWesternUnioncashviaBualuangmBankingandBualuangiBanking.CustomerscanapplyfortheserviceatBualuangmBanking,BualuangiBankingorBangkokBankbranches.Formoreinformation,callBualuangon1333.

Banking and Finance Newsbriefs

16


Banking and Finance NewsbriefsIndia

India’s GDP to Grow at Slowest Pace in 5 years in FY19 ThegovernmenthasslashedFY19GDPestimateto7percentfrom7.2percentearlier,whichwillputIndia’sgrowthrateatafive-yearlowforthecurrentfiscalyear. October-DecemberGDPgrowthcameinat6.6percent,whichwasslowestinfivequarters.AnalystsinanETNOWpollhadprojectedagrowthof6.8percent. CoresectorgrowthinJanuaryalsosloweddownto1.8percentagainst2.7percentonasequentialbasisand6.2percentonayearlybasis. Thesizeof the Indianeconomy isnowseenatRs190.5 lakhcrore,whichmakes India’sGDPat$2.7 trillion. India’snominalGDPgrowthisseenat11.5percentinFY19against11.3percentlastyear. Farmgrowthisseenataslowerpaceat2.7percentvsestimateof3.8percentearlier.Industrygrowthisseenslightlyslowerat7.7percentvs7.8percentestimateearlierandservicesgrowthestimateismarginallyrevisedupwardsto7.4percent.

Economic Times India

Iran

Iran Merging Military-Linked Banks to Stabilize Sector Iranismergingfourmilitary-linkedbanksandanotherfinancialinstitutionwiththecountry’soldestbanktoboostefficiencyandhelpstabilizethesector,thecentralbanksaidonMarch2,astheeconomyreelsunderU.S.sanctions. ManyIranianbanksareunderpressurebecauseofyearsofpoormanagementandeconomicdifficulties,causedbydecadesofinternationalsanctionsandthereimpositionofU.S.sanctionslastyear. Themergerwouldcreate“astableandmoreefficientsinglebanktoprovidebetterservicestothefamiliesofthearmedforcesandthegeneralpublic”,thecentralbanksaidinastatementquotedbystatenewsagencyIRNA. Ansar,MehrEqtesad,Qavamin,andHekmatbanksandtheKosarcreditinstitutionwillbemergedwithstate-runBankSepah,setupin1925byanarmypensionfundasIran’sfirstbank,thecentralbankstatementsaid.Itgavenofurtherdetailsofthemergerortheinstitutionsinvolved. PresidentDonaldTrumpreimposedU.S.sanctionslastMayafterpullingoutofthe2015Irannucleardeal.Thesanctionshave shaken the economy and pushed the currency to record lows, disrupting foreign trade and helping boost annual inflationfourfoldtonearly40percentinNovember.

Reuters

Indonesia

Bank Indonesia Mulls Accumulating Global Sukuk as Shariah Buffer BankIndonesiaisweighingtheuseofsukukissuedbyothercountriesinitsmonetaryoperationsasdemandforShariah-compliantsecuritiessurgeamonglendersintheworld’slargestMuslim-majoritycountry. ThecentralbankisdiscussingwhethertoaddmoreforeignsovereignsukuktoitsreservestobeusedasanunderlyingassetforSukbi,amonetaryinstrumentforliquidityoperations,accordingtoDeputyGovernorDodyBudiWaluyo.BankIndonesia’seffortstodeepenthefinancialmarketandensurestabilityarehamperedbyinadequateShariahsecuritiesatitsdisposal,hesaid. BankIndonesiaisincreasinglyrelyingonitsmoneymarketoperationstoensureliquidityforbanksafterraisingratesbyatotalof175pointssinceMaytocounteraselloffinitscurrencytriggeredbyrisingU.S.interestrates.WiththerisksofaprolongedU.S.-Chinatradewarlingering,thecentralbankhasbeeninterveninginthecurrencyandbondsmarkettoquellvolatility. Thecentralbankbeganofferingasovereignsukuk-backedsecurities,knownasSukbi,toconventionalandShariahbanksfromlastyearandtheinstrumenthasfoundfavorwiththebanks.Thebanksold4trillionrupiahof7-and14-daytenorsinitslatestauctiononFeb.13.

Bloomberg


17

Philippines

Budget Chief Benjamin Diokno Named BSP Governor OveraweekafterthedeathofNestorEspenillaJr.,theBangkoSentralngPilipinas(BSP)hasanewgovernor:BenjaminDiokno,whowillbemovingfromhispostassecretaryofbudgetandmanagement. DioknodisclosedhisappointmentonMarch4toreporters.HewillbeservingtheremainderofEspenilla’ssix-yearterm.TheappointmentwasconfirmedbyExecutiveSecretarySalvadorMedialdeaatMalacañang. ThechiefoftheDepartmentofBudgetandManagement(DBM)bestedBSPdeputygovernorsMariaAlmasaraCydTuaño-Amador,DiwaGuinigundoandChuchiFonacieraswellasMonetaryBoardmemberPeterFavilaandbankersNestorTanofBDOUnibank,AntonioMoncupaofEastWestBank,andCezarConsingofAyala-ledBankofthePhilippineIslands. TheBSPcommunityandbankersweresurprisedbytheannouncementastheywereexpectingthatanothercentralbankinsiderwouldbeappointed. BothEspenillaandhispredecessorAmandoTetangcoJr.servedthecentralbankformorethanthreedecades.Tetangcoserveanunprecedented twosix-year terms,whileEspenillaservedforonly19months.EspenilladiedonFeb.23afterbattlingtonguecancerformorethanayear.

Philippine Star

Japan

Japan’s Economy Improving but Faces Risks from Abroad: Gov’t Japan’s economy continues to improve, but faces heightened risks from overseas including the knock-on effects of aslowdowninChina,thegovernmentsaidonFebruary21. In theFebruaryeditionof itsmonthlyeconomic report, theCabinetOfficemaintained itsheadlineassessment that theworld’s third-largest economy is “recoveringat amoderatepace,” supporting theview that the economy remains in its longestexpansionphasesincetheendofWorldWarII. Butitdowngradeditsviewsonindustrialproductionandcorporateprofits,andwarnedthat“attentionshouldbegiven”totheoutlookfortheChineseeconomy,whichgrewattheslowestpacein28yearsin2018,theongoingtariffwarbetweenWashingtonandBeijing,anduncertaintyoverBritain’splannedexitfromtheEuropeanUnion. Industrialproductionis“increasingmoderately,whileweaknesscanbeseeninsomeareas,”theofficesaid.Inparticular,itnotedthatproductionofhigh-techproductssuchasmemorychipsusedinsmartphonesanddatacentershadslowed. Growthincorporateprofits,whichhadsoaredtorecord-highsonthetailwindsofaweakeryen,“appearstobepausing,althoughtheyremainatahighlevel,”theofficesaid.

The Mainichi

Malaysia

Malaysia’s Economy Gathers Pace in Q4 on Improved Exports Malaysia’seconomyexpandedatafasterpaceinthefinalquarteroflastyear,endingayearofweakeningmomentumasresilientexportshelpedtoshoreupgrowthamidaslowdowninglobaldemandfromtheUS-Chinatradewar. SolidgrowthingrossdomesticproductprovidesawelcomereprieveforPrimeMinisterMahathirMohamad’sadministration,whichhasfacedsimmeringdiscontentoverrisinglivingcostslessthanayearafterrompingtoashockgeneralelectionvictoryinMay. Thecentralbanksaiditexpectstheeconomytoremainonasteadygrowthpath,supportedbysteadydomesticdemandandimprovingexternalappetiteforMalaysia’sexports. “Malaysiawillcontinuetoexperiencequalitygrowthinexternaldemandandthatwillprovidesupporttogrowthin2019,”BankNegaragovernorNurShamsiahMohdYunustoldanewsconference. SoutheastAsia’sthird-largesteconomyexpanded4.7percentinthefourthquarterfromayearearlier,upfrom4.4percentinthethirdquarter.

Straits Times

Banking and Finance Newsbriefs

18


Banking and Finance NewsbriefsSingapore

MAS named central bank of the year TheMonetaryAuthorityofSingapore(MAS)hasbeennamedcentralbankoftheyear,itwasannouncedonFebruary6.TheawardfromLondon-basedjournalCentralBankingrecognisesbestpracticesinpolicy,governance,economicsandmanagement. Editor-in-chiefandawardcommitteechairmanChristopherJefferysaid inapressstatement:“Singapore’scentralbankstandsoutforitspioneeringfintecheffortscombinedwithitsconsistencyofperformanceinmonetarypolicy,financialstabilityandsupervision. “TheMAShasprovenitselftobeawell-structuredandagileinstitutioncapableofintroducingjoined-uprule-makingwhileembracingtechnologicalchange,allthewhileseekingtomaintainafocusonprudentoversightoffinancialinstitutions-forwhichithasastrongtrackrecord.” ThejournalnotedthatMAShasdisplayedanenviabletrackrecordformonetaryandfinancialstability,implementscoherentfinancialsystemoversightasa“super-regulator”,andhasemergedasapioneerincreatingaframeworktofacilitatenext-generationtechnologicalandfinancialinnovation.

The Straits Times

Thailand

Thailand to Buy $318 mln Worth of New Shares in Bank Merger - Finance Minister Thailandwillbuy10billionbaht($317.97million)worthofnewlyissuedsharesinthemergerbetweenTMBBankandThanachartbank,aseniorofficialsaidonMarch7. Thegovernmentisinvestingbecausethenewbankwouldbemoreefficient,FinanceMinisterApisakTantivorawongtoldreporters. TMBhassigneda$4billionmergeragreementwithThanachartBankwhereTMBwouldoffernewsharesworth40billionto45billionbahttoitsshareholdersand50billionto55billiontoThanachartshareholders,ThanachartCapitalandCanada’sBankofNovaScotia. Thecombinedbankwouldhaveassetsof1.9trillionbahtand10millionretailcustomers. TheThaigovernmentcurrentlyowns25.92percentinTMBandDutchbankinggroupINGholds25percent. TheBankofNovaScotiacurrentlyholds49percentofThanachartbank,andThanachartCapitalholds51percent.INGandThanachartCapitalwillholdatleasta20percentstakeinthenewentityandtheBankofNovaScotiaisexpectedtoholdasignificantlysmallerstake.($1=31.4500baht)

Reuters

Taiwan

Taiwan Intent on Improving Anti-Money Laundering Score TaiwanishopingtoearnanimprovedscorewhenanevaluationteamfromtheAsia/PacificGrouponMoneyLaundering(APG)returnsforafour-dayfollow-uponsitereviewinMarch,accordingtoaMinistryofJusticeofficial. DeputyJusticeMinisterChenMing-tangsaidthatwhentheteamreturnsitwillbeanopportunityforTaiwantoimproveitspreliminaryresultsfromamutualevaluationbytheAPGduringathirdroundofapeerreviewconductedfromNov.5to16,2018. TheAPGusesa“mutualevaluation,”orpeerreview,toassessthedegreetowhichitsmemberscomplywithinternationalstandardsincombatingmoneylaunderingandterroristfinancing. A bad score can hurt the reputation of a country’s financial sector and put it at amajor disadvantage in engaging ininternationalfinance. Thethirdroundpeerreviewhasfourpossibleoutcomes--“regularfollow-up,”“enhancedfollow-up,”“transitionalfollow-uplist”and“non-cooperation”--with“regularfollow-up”thebest,saidChen,whoalsoheadstheExecutiveYuan’sAnti-MoneyLaunderingOffice(AMLO).

Focus Taiwan


19

Banking and Finance NewsbriefsVietnam

Vietnam Banks’ Profitability Improves Vietnamesebanksareforecasttogaininprofitabilitythisyear,butraisingcapitalwillbeakeyfocusforbankstomeettheStateBankofVietnam’sstrictBaselIIrequirements. According to a report released on February 25 by ratings agencyMoody’s Investors Service,Moody’s-rated banks inVietnamhaveshownhigherprofitabilitythroughwidernetinterestspreadsandlowercreditcosts,whichledinturntoimprovementsinassetqualitybecausethebanksutilisedtheprofitgrowthtowriteoffremaininglegacyproblemloans. Thereportshowedthebanksachievedahigheraggregatereturnonassetsforasecondyearrunning,registeringariseof1.1percentin2018from0.9percentin2017. Aggregatenetincomeforthebanksalsorose35percenttoVND70trillion(US$3billion)lastyearfromthepreviousyear,despiteamoderationofcreditgrowth. “For2019,VietnamesebanksthatMoody’srateswillachieveafurtherimprovementinprofitability,againbecauseofwidernetinterestspreadsandlowercreditcosts,”saidRebacaTan,aMoody’sanalyst.

Vietnam News

Publications

The Future of Work: Regional Perspectives

Thisstudyconsidershowtechnologyislikelytochangelabormarkets inAfrica;DevelopingAsia;EmergingEurope,CentralAsia,andtheSouthernandEasternMediterranean;andLatinAmericanandtheCaribbeaninthecomingyears. Recent technological innovation in fields such asrobotics, automation, and artificial intelligence have reducedthe number ofworkers required in a range of sectors, whilelowering costs and increasing reliability. This trend hasled policy makers, academics, chief executive officers, andentrepreneurstoaskwhattypesofjobswillbemostaffected,whatnewskillsetswillbeneededforthejobsoftomorrow,andhowgovernmentscaneasethetransition. Thisstudyidentifiesconcretepolicyactionscountriesin these regions could take to face up to the challenges andseize the opportunities presented by emergent technology. ItisacopublicationbetweenAfricanDevelopmentBank,AsianDevelopment Bank, European Bank for Reconstruction andDevelopment,andInter-AmericanDevelopmentBank.

Contact for details: ADB Publishing Website: https://www.adb.org/publications

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PublicationsStrengthening the Environmental Dimensions of the Sustainable Development Goals in Asia and the Pacific: Tool Compendium

ADB,incollaborationwithUNEnvironment,preparedthistoolcompendiumtohelpdevelopingcountriesimplementtheenvironmentaldimensionsoftheSustainableDevelopmentGoals. ThetoolspresentedherecanhelppolicymakersgainabetterunderstandingofSustainableDevelopmentGoal(SDG)interlinkages,establishhorizontalandverticalpolicycoherence,andselectappropriateguidelines, indicators,and institutionalarrangements for effective integration into national policies,plans, and programs. This publication reflects the high-levelcommitmentofADBandUNEnvironment tosupporteffortsto accelerate progress in implementing the environmentaldimensionsoftheSDGs.Contact for details: ADB Publishing Website: https://www.adb.org/publications

World Bank Annual Report

accordancewiththerespectivebylawsofthetwoinstitutions.Annual Reports for the International Finance Corporation(IFC),theMultilateralInvestmentGuaranteeAgency(MIGA),and the International Centre for Settlement of InvestmentDisputes (ICSID) are published separately. Throughout thereport, the termWorldBank and the abbreviatedBank referonly to IBRDand IDA; the termWorldBankGroupand theabbreviatedBankGrouprefertothecollectiveworkofIBRD,IDA,IFC,andMIGA.AlldollaramountsusedinthisAnnualReportarecurrentU.S.dollarsunlessotherwisespecified. Funds allocated to multiregional projects areaccountedforatthecountrylevelintablesandtext.Fiscalyearcommitments and disbursements data is in accordance withthe audited figures reported in the IBRD and IDA FinancialStatements and Management’s Discussion and Analysisdocumentsforfiscal2018.Asaresultofrounding,numbersintablesmaynotaddtototalsandpercentagesinfiguresmaynotaddto100.Contact for details: World Bank Publicationhttp://www.worldbank.org/en/about/annual-report

ThisAnnualReport,whichcoverstheperiodfromJuly1,2017,toJune30,2018,hasbeenpreparedbytheExecutiveDirectors of both the International Bank for ReconstructionandDevelopment (IBRD)and the InternationalDevelopmentAssociation(IDA)—collectivelyknownastheWorldBank—in

Published by the Secretariat, Asian Bankers Association Ernest Lin, Secretary Treasurer; Amador R. Honrado, Jr., Editor, Jacqueline Uy, Associate Editor

Wendy Yang, Contributing Editor; Teresa Liu, Assistant Editor 7F-2, No. 760, Sec. 4 Bade Road, Taipei 10567, Taiwan; Tel: (886 2) 2760-1139; Fax: (886 2) 2760-7569

Email: [email protected]; Website: www.aba.org.tw

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