The ASEAN Banking Framework (under Pillar 1) aims to integrate the region’s banking
markets by ultimately allowing banks from one member country to enter and operate in
the markets of other members, eliminating discrimination against foreign banks vis-à-
vis national banks, and to create a more “consistent” regional banking environment. The
framework allows for certain limitations to allow member states to prevent risks to their
banking systems from foreign entry if they should arise. In particular, only the highest
quality banks that meet stringent qualifications will be allowed to enter the markets
of all the member countries and the granting of equal treatment for foreign entrants
will be based on their risk profile. Domestic regulators will be afforded the option to
maintain certain restrictions that may limit cross-border expansion if prudential
concerns warrant them and the harmonisation banking regulations across country will
proceed more slowly, except in certain areas including “prompt corrective action”.