Operational Flexibilities to the Locally-Incorporated Foreign Banking Institutions Operating in Malaysia
Bank Negara Malaysia today announces that the locally-incorporated foreign banking institutions (LIFBs) operating in Malaysia will be allowed to establish up to four additional branches within a period of one year with effect from 1 January 2006. This operational flexibility represents the first of a phased approach of branching liberalisation, in line with the broad strategies outlined in the Financial Sector Masterplan.
The objective is to evolve Malaysia's financial system into one that is able to best serve the nation. Towards this objective, our aspiration is for the financial sector to provide world class financial services in terms of product range, quality and pricing nationwide. Being an integral component of the financial sector, the LIFBs are expected to contribute towards achieving this objective.
The restructuring and reform initiatives that have been undertaken have now strengthened the capacity and capability of the domestic banking sector. This has resulted in stronger and more competitive domestic banking institutions that are better positioned to respond positively to increased competition in terms of offering a wider range of innovative products and continuously improving customer service quality. Today, the domestic banking institutions command a respectable market share, accounting for 78% of total loans, 68.3% of housing loans, 84.7% of SME loans and 78.3% of business loans.
The cornerstone of Malaysia's economic management is the policy of pursuing balanced growth in an environment of social stability. Domestic banking institutions with large presence in the non-urban areas, some as high as 20% of total branches, have succeeded in achieving sustainable performance while ensuring that rural areas have access to banking services. The LIFBs, on the other hand, are located mainly in major cities. A wider dispersion of bank branches across the country will further enhance the avenues for consumers to have access to banking services, including from the LIFBs. In this regard, LIFBs will be allowed to establish up to 4 new branches based on a predetermined ratio of 1(market centres):2(semi-urban):1(non-urban).
With this operational flexibility, LIFBs are expected to participate in the financial sector in a more meaningful manner and play their intermediation role effectively in the domestic economy. The decades of economic policies to promote balanced growth and socio-economic stability have been important in sustaining Malaysia's economic performance and development.
In line with Bank Negara Malaysia's vision to create a banking sector that is efficient, resilient and dynamic to effectively support the needs of economic transformation, Bank Negara Malaysia will monitor and review the progress of this liberalisation initiative with flexibility to ensure that maximum benefits can be reaped from this process.
Bank Negara Malaysia
28 December 2005
The objective is to evolve Malaysia's financial system into one that is able to best serve the nation. Towards this objective, our aspiration is for the financial sector to provide world class financial services in terms of product range, quality and pricing nationwide. Being an integral component of the financial sector, the LIFBs are expected to contribute towards achieving this objective.
The restructuring and reform initiatives that have been undertaken have now strengthened the capacity and capability of the domestic banking sector. This has resulted in stronger and more competitive domestic banking institutions that are better positioned to respond positively to increased competition in terms of offering a wider range of innovative products and continuously improving customer service quality. Today, the domestic banking institutions command a respectable market share, accounting for 78% of total loans, 68.3% of housing loans, 84.7% of SME loans and 78.3% of business loans.
The cornerstone of Malaysia's economic management is the policy of pursuing balanced growth in an environment of social stability. Domestic banking institutions with large presence in the non-urban areas, some as high as 20% of total branches, have succeeded in achieving sustainable performance while ensuring that rural areas have access to banking services. The LIFBs, on the other hand, are located mainly in major cities. A wider dispersion of bank branches across the country will further enhance the avenues for consumers to have access to banking services, including from the LIFBs. In this regard, LIFBs will be allowed to establish up to 4 new branches based on a predetermined ratio of 1(market centres):2(semi-urban):1(non-urban).
With this operational flexibility, LIFBs are expected to participate in the financial sector in a more meaningful manner and play their intermediation role effectively in the domestic economy. The decades of economic policies to promote balanced growth and socio-economic stability have been important in sustaining Malaysia's economic performance and development.
In line with Bank Negara Malaysia's vision to create a banking sector that is efficient, resilient and dynamic to effectively support the needs of economic transformation, Bank Negara Malaysia will monitor and review the progress of this liberalisation initiative with flexibility to ensure that maximum benefits can be reaped from this process.
Bank Negara Malaysia
28 December 2005
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