Bank pact aids expansion

Bank pact aids expansion

Thai, Malaysia firms seek mutual growth

The Bank of Thailand and Bank Negara Malaysia (BNM) are prepared for cross-border business expansion under a bilateral Qualified Asean Bank (QAB) agreement.

The Bank of Thailand announced yesterday an application for local banks to expand business operations in Malaysia under the QAB pact.

Malaysian banks can offer financial services in the Thai market under this accord, said Chayawadee Chai-Anant, senior director of the central bank's economic and policy department.

The move is part of a bilateral arrangement under the Asean Banking Integration Framework between the two central banks, which was concluded in April 2019.

Banks in Thailand and Malaysia are invited to state their interest in being a QAB in Malaysia or Thailand.

A successful QAB candidate will enjoy market access and operational flexibility under the bilateral arrangement.

To ensure the financial stability of both countries, a QAB candidate must be a strong and well-managed bank that has its interest endorsed by the home country's regulator, and is in compliance with the host country's prudential requirements.

The bilateral arrangement and its commitments form part of the Asean Framework Agreement on Services.

Under the bilateral agreement, the Bank of Thailand allows up to three Malaysian banks to open operations in the Thai market, including those already doing business here.

Two Malaysia-based banks operate in Thailand: CIMB Bank Thai (CIMBT) and RHB Bank. The QAB quota makes room for a third.

Malaysia's Maybank has asked the Bank of Thailand for a QAB licence informally, but the bank has not applied yet, she said.

If CIMBT and RHB want to convert their existing licences to QAB licences, they can do so.

QAB regulations allow for more flexibility in doing business as well as expansion in the Thai market, said Ms Chayawadee.

BNM reciprocates by offering QAB licensing for a maximum of three Thai banks. Currently the only Thai bank operating in Malaysia is Bangkok Bank.

The Bank of Thailand plans to discuss the QAB bilateral agreement with local commercial banks at a later date, she said.

Ms Chayawadee said in addition to the bilateral agreement between Thailand and Malaysia, the Bank of Thailand has also been discussing the pact with other regional central banks.

In addition to the agreement between Thailand and Malaysia, QAB bilateral agreements have also been finalised between the central banks of Malaysia and the Philippines as well as Malaysia and Indonesia.

Two QAB candidates have applied for QAB licences.

The QAB scheme is meant to facilitate greater intra-Asean trade and investment in addition to standardising Asean banks and strengthening the financial stability of the overall regional banking system.

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