Calls grow for unified banking regulation across Asia


Calls for a stronger and more united banking regulation across the Asia Pacific region have grown stronger over the past week, in part spurred by Australian banks show growing interest in expanding into Asian region.

Last week, David Murray, the head of a government-led inquiry into Australia’s financial system, suggested that a framework should be put in place for Asian nations to acknowledge each other. ANZ Banking Group (ANZ) has also been vocal about a stronger voice in Asia, with the deputy chief of the bank’s large international and institutional banking division, Gilles Plante, last week reiterating the need for a collaborative voice in the region, suggesting that each nation’s individual regulatory body alone may not be effective.

According to Leon Perera, Chief Executive Officer of Spire Research and Consulting, Asian governments should be at the forefront of global regulation, especially considering its large unbanked population and substantial volume of mobile services.

“Given the global nature of the internet, it is likely that any effective trans-national regulatory framework or even set of best practices will be global rather than regional in nature. Hence, a global platform for such multi-lateral co-operation should be used, but with Asian governments being leaders rather than followers.”

Region lagging

Since the implementation of global regulations: Basel I, Basel II and now Basel III after the global financial crisis, Asia has faced constraints with its implementation, when it comes to formulating the region’s own banking regulations, with industry-wide concerns of inconsistent implementation across different nations.

APAC banks such as ANZ and Commonwealth Bank of Australia (CBA), and several industry observers have previously raised concerns the Basel reforms are too Europe and US-centric after the global financial crisis affected those regions, leaving an uneven playing field for the less mature Asian market. 

Meanwhile, the implementation of Basel III reforms has been extended from 2015 to 2018 in Asia, with India most recently extending the deadline as far out as March 31 2019.

Calls from some banks to regulate non-banks have also emerged. Though the Australian Bankers Association (ABA) has banded together to submit their own report in to the financial inquiry, in Asia, Perera believes innovative companies such as Google, and WeChat should only be lightly regulated, and banks should react to their threat as they would with any other competition.

“Regulations should be light, so as not to stifle the prospect of these non-bank players providing financial services to the unbanked population. Regulations should pertain to areas of concern like transaction assurance and insurance protection for stored value and credits.”

In a report in The Australian, Plante of ANZ warned of “unintended consequences” of global regulation like Basel III.region lacking solid leadership.

“If you had a little bit more co-ordination, a little bit more leadership (in Asia) around financial matters, things would be much better for operators, customers, economic growth and also for being more sensible about the unintended consequences of global regulation like Basel III,” he was quoted as saying.