Euromoney, May 9 2019
Read the full article here: https://www.euromoney.com/article/b1f7nn2qq5x3zt/is-it-time-for-asian-banks-to-go-global
As Asia’s share of world GDP and global capital increases, the trend among Asia-based banks is for regional rather than global expansion. The region’s leading chief executives explain their approach to growth.
Asia’s demographic numbers have long been dizzying, especially the projections of where they are going. The Asian Development Bank expects a six fold increase in per capita income in purchasing power parity terms by 2050, by which time the continent will account for 52% of global GDP. By then there will be three billion more affluent Asians looking for banking services.
Foreign banks have sought to gain exposure to Asia for a century, but what about the other way around? For the moment, the penetration of banks from the region into the rest of the world is mainly limited to representative offices. State Bank of India has 190 foreign offices in 36 countries, but since they all handle India-related business, can you really think of it as a global bank?
Acquisition is ad hoc: ICBC buying South Africa’s Standard Bank, MUFG’s crisis-era stake in Morgan Stanley, the international aspirations of Nomura, Macquarie and (through CLSA) Citic Securities. HSBC and Standard Chartered are perhaps spiritually Asian institutions, but both are legally headquartered in the UK.
Instead, the imperative of leading banks in Asia has been to conquer their own region – and there are logical reasons for this. Asia is now one third of global GDP – 33.85%, according to the World Bank, including Japan but not Australia.
“It’s not a small piece of pie,” says Piyush Gupta, chief executive of DBS in Singapore, one of the most expansive of Asian banks. “And it’s growing at 6%. Why would I allocate capital to the other two thirds growing at 1.5%?
“It’s not as if we have run out of opportunity in our backyard. This is the fastest growing economy, there is a big Chinese diaspora we understand, an Asian culture we know how to deal with – why would I not play to my strengths?”