Foreign banks are expanding at a much slower pace in Asia than other emerging markets even as authorities face up to reform of their banking systems to better prepare them for a more competitive world, analysts said yesterday.
Many countries in the region have raised or eliminated ceilings on the shareholdings that foreign partners can hold in bank joint ventures as part of reforms introduced since the 1997 to 1998 Asian financial crisis brought the region to its knees.
"But the presence of foreign banks in Asia is still very low in comparison with other emerging markets -- lower than in central Europe and Latin America," said Heather Montgomery, a research fellow at the Asian Development Bank Institute, the think tank of the Manila-based bank.
The weak level of foreign bank penetration in Asia is across-the-board, Montgomery said.
This is reflected in loans, deposits and assets and even after taking into account the activity of branches of foreign banks -- the most widely used mode of entry in the region, she said.
Montgomery, who has just completed a study examining the role of foreign banks in post-crisis Asia, said the low entry level could be due to "a lack of good buys or profitable opportunities."
Media reports have suggested that despite moves to liberalize the banking sector, some governments have simply refused to let in foreign banks even when they put in the best bids for troubled banks, she said.
Analysts said Asian nations cannot run away from the fact that they have to open up the banking sector in the face of competition as global rules on trade in services take shape.
"The opening up has not been that rapid but authorities on the whole tend to look at it in a pragmatic fashion -- that you have to consolidate, get larger and face competition as the world becomes smaller," said Bernard Peh, director of Asia credit research with Barclays Capital.
Peh cited as examples the purchases of bank stakes by gov-ernments in South Korea and Indonesia which have then been sold on to the public and foreign shareholders.
In China, he said, the authorities are busy cleaning up balance sheets ahead of opening up the banking sector to foreign players in 2005 while in Malaysia, domestic banks are undergoing consolidation ahead of full blown competition in five to 10 years.
Montgomery said Asian countries would "gain extensively" by allowing foreign financial institutions in as they could use their capital and expertise to confront competition.
She said policymakers should encourage fully-owned subsidiaries or majority-owned joint ventures rather than offs-shore financial centers or branching.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source
SHOT IN THE ARM: The new system can be integrated with Avenger and Stinger missiles to bolster regional air defense capabilities, a defense ministry report said Domestically developed Land Sword II (陸射劍二) missiles were successfully launched and hit target drones during a live-fire exercise at the Jiupeng Military Base in Pingtung County yesterday. The missiles, developed by the Chungshan Institute of Science and Technology (CSIST), were originally scheduled to launch on Tuesday last week, after the Tomb Sweeping Day holiday long weekend, but were postponed to yesterday due to weather conditions. Local residents and military enthusiasts gathered outside the base to watch the missile tests, with the first one launching at 9:10am. The Land Sword II system, which is derived from the Sky Sword II (天劍二) series, was turned