| Siti Hajar & Nuri Sufri |
ALLAYING concerns raised by some members of the business community over Brunei’s initiatives in attracting foreign direct investment following HSBC Brunei’s decision to wind down operations, the Autoriti Monetari Brunei Darussalam (AMBD) said the Sultanate is still home to several other international banks that are able to meet business expectations.
Though HSBC does have a strong international presence with a range of services to cater to any financial needs, corporate or otherwise, the country’s financial regulator said in a brief e-mail statement to the Weekend Bulletin there are other banks of reputable stature still operating in the Sultanate.
“Due to the interconnectedness of the global banking industry, these banking institutions are also able to provide various financial products and services to cater to the public including foreign investors in both domestic and international markets,” the central bank said.
Reiterating that HSBC’s wind-down is not a reflection of the Bruneian economy, AMBD in another statement stated that HSBC’s decision is part of its global strategy to focus on its core business.
“Whilst respecting the decision made by HSBC, the role of AMBD is to ensure HSBC’s phased wind-down will be conducted in an orderly manner while safeguarding the stability of the financial system,” the statement said.
Elaborating that large global banks have been subjected to tougher global regulatory set of measures by their home regulators to mitigate any future systemic crisis following the Global Financial Crisis 2008, AMBD said that all banks and financial institutions around the world have been faced with tougher capital and liquidity requirements, “and have had to realign their business strategies as a result”.
In many cases, this has resulted in business shrinkage, sale of certain business operations, redundancies and even losses, the statement added.
According to AMBD, the Key Financial Soundness Indicators as of 2015 showed that the banking industry in the country has remained resilient and stable where aggregate regulatory capital adequacy ratio for the banking sector stood at 21.5 per cent, well above the minimum regulatory requirement of 10 per cent.
“The gross non-performing loans/financing ratio also shows continuous improvement by declining to 4.9 per cent as of the end of December 2015 from five per cent in December 2014.”
With regard to comments of alleged impact of profitability due to the regulatory environment, several of these regulations introduced by the AMBD were aimed at addressing household debt and shifting banks’ lending towards productive sectors to ensure diversified and sustainable economic growth.
“Furthermore, AMBD has also issued several necessary regulations to ensure the industry remains sound and robust in line with international standards.”
It was further stressed that HSBC’s profit rose in 2015 compared to 2014.
“The financial results of other major players in Brunei for 2015 portray a general picture of increasing income and profitability.
Since 2011, the banking industry remains profitable where Return of Equity and Return on Assets stood at nine per cent and 1.3 per cent respectively in 2015 compared to 7.9 per cent and 1.1 per cent in 2011.”
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