Bank Negara has recently issued 5 new commercial banking licenses to 5 financial institutions and banks from overseas. The approval of the new licenses is part of the effort to further liberalize the banking sector and attract foreign investment as the country steps up the gear to drive the nation in achieving 6% of annual growth by year 2020.
Since 1974, the country has effectively imposed a freeze in granting licenses to foreign commercial banks.
The move is also considered part of the government effort in increasing competition among the bank operators in the country, which hopefully would boost the quality of service delivery. Ultimately, customers would (and should) be able to benefit from the stiffer competition. For some local banks, the latest development would not be so much of welcoming news as this may mean they might be force to find offices outside of the country as to expand their market share and continue to stay relevance.
So, which are the 5 banks, and where do they come from?
1. BNP Paribas SA
Based in Paris, France, BNP Paribas is currently among the world’s largest banking groups. The bank is a result of a massive merger between the Banque Nationale de Paris (BNP) and Paribas some ten years back. This year, Forbes listed BNP Paribas as the 11th largest company in the world as well as the largest in France. In the 2008 and 2009 financial crisis, BNP recorded strong showing and escaped almost unhurt.
While BNP Paribas has never done commercial banking in this country, the bank has set his foot in the shore as early as in 1974, with the opening of a representative office in Kuala Lumpur. It later obtained the Offshore Banking License and began to issue Ringgit-Denominated Guarantees for companies operating in the country. In Asia, BNP Paribas is regionally headquarted in Singapore.
2. Mizuho Corporate Bank
Mizuho Corporate Bank, or MHCB, belongs to the Mizuho Financial group, which is presently the second biggest financial institution in Japan. MCHB acts as the corporate and investment banking wing for the group. Mizuho banking group was listed as the 9th largest bank in the world by market capitalization in 2009, and ranked as the world’s 59th largest company in Forbes Global 2000. Overall, the bank employs about 70,000 people who work across in more 30 countries worldwide and growing.
3. National Bank of Abu Dhabi
Country: United Arab Emirates, UAE
The National Bank of Abu Dhabi, NBAD, has long been lobbying to operate in this country and it seems their wish has now been fulfilled. Coming from an Islamic country, the bank is not only expert in offering Islamic financial products and services, but considers itself as a major player in the SME business and is keen to capitalize on the strong showing of the local based SME entities, which make up 90% of Malaysia’s business landscape. Last month, the bank successfully issued its first Islamic Bonds (Sukuk) worth RM500 million here.
4. Bank Mandiri (Persero)
Bank Mandiri is Indonesia’s largest bank in terms of deposit, asset and loan size. As of today, the bank has total assets worth of USD 25.7 billion. An impressive figure, but still far cry from Maybank’s figure (over USD80 billion), Malaysia’s largest bank. Interestingly enough, Bank Mandiri was born out of 4 failed Indonesian banks and it was through the Indonesian government that a single, amalgamated banking group was successfully created in 1999.
5. Sumitomo Mitsui Banking Corp
Based in Tokyo, Sumitomo Mitsui Banking Corporation or SMBC belongs to the Sumitomo and Mitsui Group. Upon getting the approval for Malaysia operation, the bank quickly moved to draw up its penetration plan and is ready to have a full fledge operation commencing by mid of 2011. Kuala Lumpur will be the city where the SMBC head office located. Like Mizuho, SMBC Bank already has presence in the country, but they are limited to do only dollar denominated transactions and is not given access to handle local currency.