Finding Room to Maneuver
Despite the sheer scope of Asia’s corporate and investment banking business, market-specific regulatory and competitive dynamics continue to raise serious barriers to entry in most Asian markets, even for domestic institutions. The combination means that all institutions will need to make their moves with particular care
Regulation: Opening only a little
While we expect incremental increases in regulatory openness, dramatic shifts are unlikely over the next five years. Capital and liquidity controls will continue to make it difficult for institutions to allocate capital effectively across the region, leaving isolated pools of liquidity. Restrictions on credit markets will still limit innovation, with the effect of tilting the playing field to local players’ advantage. In similar fashion, tight regulations on bank licensing and branch network expansion will constrain global players’ competitiveness in corporate lending and transaction banking. Finally, recent anti-inflationary measures such as price caps on lending and increases in reserve requirements—will deepen the advantages that large, domestic incumbents currently enjoy, particularly those that are current or former state-owned enterprises (SOEs).
Finding Room to Maneuver
Despite the sheer scope of Asia’s corporate and investment banking business, market-specific regulatory and competitive dynamics continue to raise serious barriers to entry in most Asian markets, even for domestic institutions. The combination means that all institutions will need to make their moves with particular care
Regulation: Opening only a little
While we expect incremental increases in regulatory openness, dramatic shifts are unlikely over the next five years. Capital and liquidity controls will continue to make it difficult for institutions to allocate capital effectively across the region, leaving isolated pools of liquidity. Restrictions on credit markets will still limit innovation, with the effect of tilting the playing field to local players’ advantage. In similar fashion, tight regulations on bank licensing and branch network expansion will constrain global players’ competitiveness in corporate lending and transaction banking. Finally, recent anti-inflationary measures such as price caps on lending and increases in reserve requirements—will deepen the advantages that large, domestic incumbents currently enjoy, particularly those that are current or former state-owned enterprises (SOEs).
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