A look at banking news from around the region, including the 1MDB scandal in Malaysia and Singapore’s thriving fintech industry
Singapore: property cooling measures create short-term shock
The value of bank and real estate stocks in Singapore are taking a hit with the announcement of real estate cooling measures by the central bank. The changes, which kicked in on 6 July, include a tightening of loan-to-value limits and higher rates of additional buyer’s stamp duty. They are aimed at controlling a quickly rising property market – which the central bank saw as “euphoric” – in an effort to lower the risk of a real estate bubble, mortgage loan losses and price shocks down the road.
Analysts forecast a downturn in the short term but stronger future returns: “Looking at the news, it’s likely to take the market a little by surprise, particularly with the broad expectation for property prices to remain on the rise through to the end of the year,” said IG Asia’s Jingyi Pan, in Singapore. “As with previous iterations, it does remain to [be seen] whether it retains longer-term impact [in] the current environment.”
“We expect that the new measures will dampen bank loans for residential property purchases and the resurgence of investment and speculative purchasing,” said Simon Chen of Moody’s Investors Service. “We also expect the measures will improve banks’ newly originated housing loans asset quality amid Singapore’s rising interest rate environment and strong supply pipeline.”
Thailand: microwaved fish curry, beers, and… banking
You can no longer buy an automatically dispensed draft beer at a 7-Eleven in Thailand – the parent company removed the machines after a week because of complaints from law enforcement and protesters – but customers will soon be able to do their banking at the stores.
The Bank of Thailand’s revised guidelines mean that 7-Eleven customers in the Kingdom will be able to access banking services like deposits and withdraws, and cash and cheque transfers – along with the bill and mobile phone payment services the chain already offers. That would be good news for rural people as the growth of brick-and-mortar banks slows and digital banking quickly becomes the norm. Under the new rules, the stores would become licenced agents of commercial banks.
Thailand has the second highest number of 7-Eleven stores in the world after Japan, with 10,268 locations. Parent company CP All has set a target of 13,000 stores in Thailand by 2021. In contrast, there are fewer than 7,000 commercial bank branches. In 2017, 223 commercial bank locations closed, while Siam Commercial Bank laid off nearly half its 27,000 employees.
“There’s no need for counters,” said Thanavath Phonvichai, an economist at Thai Chamber of Commerce University. “It reduces the cost of having so many branches. It’s like asking someone to work on the banks’ behalf.”
Singapore: fintech, financial services add 7,800 jobs
Singapore, which has the most robust fintech market in Southeast Asia, with a record $229m invested in fintech startups in 2017, added 7,800 jobs to fintech and financial services between 2016 and 2017. This job growth, quantified in the latest Pulse of Fintech report by KPMG, was driven largely by the fund management and insurance industries, and to a lesser degree by banking. As many as 2,000 of those jobs were in fintech.
“IT has emerged as a key functional area driving hiring demand across financial services – some of the fastest-growing job roles are in software development, cybersecurity, data analytics, artificial intelligence and business process engineering,” Ravi Menon of the Monetary Authority of Singapore said in a speech.
The top fintech deals of 2017 in Singapore included the $100m acquisition of Paynear Solutions by GoSwiff and the $13.5m Series B funding round
“As the sector matures, investors have shifted from experimenting with fintech to seeking out value-driven opportunities,” KPMG said in a press release. “This is particularly true for corporates who continue to invest and see fintech as a strategic play that will help accelerate their digital transformation agendas.”
Cambodia: the battle over the $30 billion ewallet market
As the fintech sector continues to expand in Southeast Asia, the region is expected to see more than $30 billion in mobile transactions by 2021 – and now even brick-and-mortar banks like Cambodia’s ABA Bank are getting in on the ewallet revolution along with their tech startup counterparts.
New cashless systems are coming online each year in the Kingdom, where the top players include Wing, Pi Pay, PayGo and now ABA Pay. The year-old ABA Pay is an ewallet that allows users to make cashless payments at more than 100 shops, restaurants and online platforms that have partnered with ABA in a network that’s expected to expand.
The region is ripe for a cashless explosion, with its average of 70% bankless citizens compared to a 30% average globally. And Cambodia is particularly well situated for cashless adoption since it enjoys the highest connectivity penetration in Southeast Asia, at 173% – and the lowest banking penetration, at just 13%.
Malaysia: Goldman Sachs banker cooperates in 1MDB probe
The German national and Los Angeles resident Tim Leissner has agreed to cooperate with US prosecutors investigating the $4.5 billion 1MDB scheme in Malaysia. Leissner was picked up by authorities outside his home in Austria after he’d been sacked by Goldman Sachs in 2016 because of his close association with the scheme’s alleged mastermind, Jho Low – a Malaysian who is on the run and whose passport has been cancelled.
Leissner, who in 2014 secretly married Kimora Lee Simmons, the ex-wife of hip-hop magnate Russell Simmons, has a reputation for hard partying and huge deals, once earning Goldman Sachs $600 million in fees via $6.5 billion in bond deals from 1MDB – fees that the Malaysian government could target as it seeks to recoup losses from the scandal.
The international investigation into 1MDB ramped up after the ouster of former Prime Minister Najib Razak in a surprise electoral upset by former and current Prime Minister Mahathir Mohamad.
This article was published in Southeast Asia Globe’s Banking Special 2018. For full access, click here.