Asean integration to fuel bank interconnection

MANILA, Philippines - With the much-anticipated economic integration of the 10-nation Association of Southeast Asian Nation (Asean), banks must have strong connections with its counterparts or have a physical presence in majority,if not all, member nations.

According to Standard Chartered Bank of the Philippines (SCBP) chief executive officer Mehandra Gursahani, the world including the Asean is getting more interconnected.

“A bank can not do things totally independently,” Gursahani said.

To serve bank clients especially the corporates, the bank must have a wide range of services and capabilities.

He pointed out that with the Asean economic integration, a bank must not only have an intimate knowledge of its immediate locality. The domestic bank must also have the right connections with banks located within majority if not all the member nations.

To achieve these, a domestic bank must either forge strategic alliances with other banks, establish a physical presence through direct investments or mergers or acquisitions (M&A), among others.

The first option makes the most sense for previously “isolated” domestic banks. The costs and risks are lowered versus the latter option which would be more expensive as well as tedious.

For SCBP, everything is already in place.

“We are the only international bank that have a presence in all the 10 Asean market; it is a region we know well, where we are deeply entrenched,” Gursahani said.

He said that they are staying close to their clients in each location, and that they are in a position to connect each to the rest of their counterparts in the region.

“We want to position ourselves as an Asean bank,” the chief executive said, adding that SCBP has a chief executive specializing in the Asean region.

The bank sticks close to its individual and corporate clients, including the respective government. With both its global as well as regional expertise, the bank can help its clients address funding needs, implement risk management, create new opportunities in the domestic and regional markets.

“If they need to enter the capital or supply chain markets, we could introduce them to new or existing markets through our regional network,” Gursahani pointed out.

The Asean economies is perceived to play a critical role for strengthening the global gross domestic product (GDP) moving forward.

Last year, the 10-regional economies combined was worth over $2.4 trillion, making the Asean the seventh largest ‘country’ if combined.

The inter-Asean trade has been growing by double digits for the last few years, while its reliance on other traditional markets have been reduced.

Likewise, trade between Asian powerhouse China and Japan has likewise increased.

“Cross border trade in the Asean and the rest of Asia is now in high gear,” the SCBP chief executive stressed.