Standard Chartered banks on ASEAN integration to boost growth

LONDON-based Standard Chartered Bank sees the Association of Southeast Asian Nations’ (ASEAN) economic integration as a boost to its business in the region, with its regional chief executive noting the lender’s edge over homegrown banks in servicing companies eyeing expansion overseas

 

“I think ASEAN economic integration is a positive for us. Particularly, we are the only international bank that has got presence across all 10 ASEAN countries,” Standard Chartered CEO for ASEAN Lim Cheng Teck told BusinessWorld in an interview last week.

“The advantage for us is that we have been in this part of the world for more than 150 years, so we have long history and deep local knowledge in those ten markets across ASEAN,” Mr. Lim said, responding to a question on how prepared the bank is in attracting, as clients, Philippine conglomerates that are expanding abroad.

“That is a really strong advantage for many of our clients... because we have got deep local knowledge, and a good understanding of the regulations, the business practice,” Mr. Lim explained.

Mr. Lim’s remarks came as Standard Chartered pursues a new global strategy this year, after reporting its first drop in full-year profits in a decade in 2013.

The bank has recently subdivided its international businesses into eight regional blocs: ASEAN, Greater China, North East Asia, MENAP (Middle East, North Africa, and Pakistan), South Asia, Africa, Europe and the Americas.

The Singapore-based Mr. Lim, who was on a visit to Manila, was appointed CEO for ASEAN in April this year.

Standard Chartered makes most of its money in Asia. Last year, before the new regional groupings were introduced, Hong Kong accounted for 28% of the group’s total profit before taxation - representing the largest share.

This was followed by other Asia Pacific (16%) and Middle East and other South Asia (15%). Singapore accounted for 13%.

India accounted for 10%, Africa for 9%, and Americas, UK and Europe for 9%.

Under the new regional groupings, Mr. Lim said that Greater China and ASEAN represent the two largest blocs, each comprising about 25% - or together totaling half - of the group’s income.

Standard Chartered’s ASEAN grouping includes the 10 ASEAN economies and Australia.

Apart from banking on Southeast Asian conglomerates with regional aspirations for its growth prospects, Standard Chartered also has its sights trained on smaller firms.

“Now we are saying, we have only one business, but three segments: the corporate segment, the retail segment, and the commercial segment,” Mr. Lim said of the bank’s current strategy.

“We see a lot of potential in the commercial client space, because commercial clients typically are companies that are in the early part of their life cycles, where they would need support from banks as they continue to grow, and across ASEAN, many of the businesses tend to fall to the commercial kind,” Mr. Lim said.

He differentiated the commercial segment from the bank’s corporate banking business.

“Corporate banking’s where our clients have a much more sophisticated requirement. There will be that client that has got the ability to tap the debt and capital market. They can issue debt on their own. So these tend to be [of a] much bigger kind,” Mr. Lim explained.

“But there’s also a segment of clients that do not have that ability today.

These are the clients that we see [with] tremendous potential, particularly across ASEAN,” he said.

“I would say these are SMEs (small- to medium-sized enterprises).” -- Raymund Luther B. Aquino

 

source:  Businessworld