Welcome to the latest edition of Protiviti’s Asia-Pacific (APAC) Financial Services Insights. In this monthly newsletter, we provide a summary of important developments across the APAC financial services sector, including those related to the ever-changing regulatory landscape.
In addition to sharing news headlines from across the region, Protiviti and Robert Half have been producing content around how to the challenges of the current environment. Click here to read our thought leadership and blogs, aimed at helping organisations deal with their business continuity and their organisational and talent challenges in this difficult time.
Australia’s Big Four banks may cut dividends and stop cash flows to investors, thus joining Europe and New Zealand to save capital as a buffer against the economic fallout from the coronavirus pandemic. However, Prime Minister Scott Morrison said that the regulators do not see restrictions on capital returns as necessary for Australia.
The Reserve Bank of Australia announced a rate cut to 0.25% and said it would do what is necessary to achieve its target of 0.25% for three-year government bond yields as it predicted a very large economic contraction next quarter. The package included an unlimited bond buying programme.
According to the Reserve Bank of Australia, banks are well placed to deal with the coronavirus-driven economic downturn, but it also warned of vulnerabilities in household debt and risks in the property market.
Such policies will provide needed relief to larger companies in sectors like airline, oil and gas, but banking sector profitability will decline due to lower net interest margins. These policies could also lead to even greater credit losses once the moratoriums are lifted and cause decline Asia's banking sector profitability.
The issuance of new banking licenses coupled with market liberalization is expected to create 100 new financial institutions in Asia Pacific by 2025, according to a recent report.
(Finews Asia, 29/04/2020)
The Covid-19 pandemic is forecast to shrink the global economy by as much as 6% in 2020, and as cities stay in lockdown, the numbers are unlikely to get better. Despite this, the current situation could present an opportunity for financial institutions to make the leap and go digital – even though banks are tightening their belts and putting tech investments on the back burner.
(Tech in Asia 04/05/2020)
Hong Kong Securities and Futures Commission granted permission to Arrano Capital, the blockchain division of Venture Smart Asia, to open a cryptocurrency fund with a capital of $100 million.
(Coin Shark, 20/04/2020)
The Hong Kong Monetary Authority is using the funds obtained through a Federal Reserve repo facility to help alleviate liquidity in the global U.S. dollar interbank money markets. The funds will be provided to licensed banks in competitive tenders in the form of seven-day repurchase transactions between 6 May and 30 September 2020.
The Hong Kong Government and other bodies of authority have been proposing several key measures to enhance the attractiveness of the insurance industry in Hong Kong.
According to the General Insurance Association, insurers will continue providing a full range of services, including insurance policy issuance, premium payment, and claims processing services, to customers and members of the public through their contact centres and digital means.
(Insurance Business, 07/04/2020)
Successful applicants will be informed in the second half of year instead of June 2020 as originally intended by the regulator. Extending the assessment period for the awarding of the licences will allow applicants to focus on managing the immediate impact of the Covid-19 pandemic on their businesses.
(Strait Times, 09/04/2020)
The Monetary Authority of Singapore (MAS) told customers to stop going to brick and mortar bank locations and urged consumers to use online or phone banking channels to meet their banking needs. About half of the bank branches in Singapore have closed temporarily, in view of reduced customer traffic and spread of infection.
(Crowdfund Insider, 17/04/2020)
China's central bank lowered the interest rate on reverse repurchase agreements by 20 basis points, as authorities stepped up easing measures to relieve pressure on the economy that has been hit hard by the coronavirus epidemic
The guideline requires commercial lenders to lend to SMEs at a pace no lower than the industry lending growth rate and specified different targets to control the lending rates and bad loan ratio on SME loans based on the size of the bank.
The increase occurred as lenders agreed to let small businesses defer payments on $124.6 billion in debt and rolled over another $81.67 billion, said China Banking and Insurance Regulatory Commission.
(Bloomberg Quint, 22/04/2020)
The Bank of Japan expanded monetary encouragement and pledged to buy an unlimited amount of bonds to keep borrowing costs low for customer and spend its way out of the growing economic downturn from the coronavirus pandemic.
The Sumitomo Mitsui Financial Group (SMFG), which is Japan’s second-largest financial institution by market cap, will reportedly sign an agreement with SBI Holdings, a Tokyo-based financial services company group, to provide digital banking services via mobile devices.
(Crowdfund Insider, 27/04/2020)