Asian Bankers Association (ABA) chairman Alfonso T.Yuchengco talks with VIR about this week’s ABA General Meeting and the challenges that lie ahead for the banking sector.
Why did the ABA choose Vietnam as the venue for its 21s t General Meeting and Seminars?
Vietnam provides an opportunity for ABA member banks to have a better understanding of banking and financial developments in the country including future needs to strengthen such developments. Such understanding will help ABA, in its exchange of views and mutual cooperation with the Vietnam-based ABA member banks, to focus and draw on the expertise of its members consisting of nearly 100 banking and financial institutions located in 25 countries around the region (from South Korea and Japan in the northern part of Asia to Australia in the south, the Asean countries, India, Sri Lanka, Turkey, Uzbekistan and Mongolia).
The theme of this year’s meeting is “Asian banks: Measuring up to new challenges”, what do you think are the major challenges faced by Asian banks?
There are many challenges worthy of mention. Some of these created by external factors such as the war in Iraq and the increasing price of oil (who would have thought we would see oil at US$54/barrel?). Terrorism and its impact on a country’s economy also has to be considered. The financial services sector, particularly the banking industry, plays a key role in helping countries and their economies weather such challenges. Thus, the need to strengthen bank capitalisation and risk management and to implement measures such as accelerating the convergence of domestic and international accounting standards to facilitate uniform financial reporting which encourages foreign direct and portfolio investments and promotes greater financial reporting which encourages foreign direct and portfolio investments and promotes greater financial stability. Globalisation continues to bring about increased competition from outside the region. This has led to the introduction of stricter global standards, governance and best practices, and stricter regulations.
How can Asian banks overcome those challenges?
Asian banks should sharpen their competitive edge, particularly in terms of sounder risk management, better corporate governance and comprehensive strategies in response to global competition. However, the success of banks in adapting to these new conditions is also dependent on many countries undertaking further reforms to create a more favourable environment for the growth of financial services.
In what ways can the ABA help member–banks implement these measures?
ABA has different vehicles to help Asian banks implement solutions to overcome such challenges. One of these is policy advocacy through the issue of position papers for transmitting ABA’s views on policy issues of concern to members. Position papers submitted of concern to members. Position papers submitted by ABA to APEC member–governments as well as regulatory authorities–including Vietnam–include “Building Capacity in Asia–Pacific Banking Systems to Effectively Implement the New Basel Accord”, “Promoting APEC Economies” and “Convergence Toward International Financial Reporting Standards (IFRS)”. In addition, we are promoting the emergence of a strong region-wide insolvency law and creditor rights regime. We are working with the Asian Development Bank (ADB) to urge authorities in the region to develop a framework for the cross–border recognition of insolvency administrations and to promote region–wide approaches to informal workouts. We also provide member–banks with training courses through capacity–building programmes.
What can ABA do to help Vietnamese banks realise their strategic objectives in the integration process?
Vietnamese banks can profit from their membership in ABA by taking advantage of the training programmes that ABA has designed with the needs of its member–banks in mind. They can also help shape the international regulatory and supervisory framework in a way that meets the needs of Vietnamese banks by actively participating in ABA’s policy advocacy activities.