Malaysian banks have undergone significant consolidation in the wake of South East Asian financial crisis with mergers, acquisitions between banks and finance groups. There are only ten domestic banks now accounting for about 76% of banking business. Foreign banks account for the remaining 24%, but their share appears to be growing, forcing domestic sector to strengthen and become competitive. Domestic banks may be termed as conventional pure form bankers extending finance to traditional sectors like industries, trade, personal and SME sectors. They are not big by size of assets but they are becoming stronger due to the reforms process. Services like insurance and wealth management are yet to pick up through cross selling opportunities. Non-performing assets are a little on the higher side needing greater attention. Recapitalization, sale of weak loans to Asset Management Companies, Corporate Debt Restructuring, tightening of credit appraisal and supervision techniques have all contributed in bringing down the NPA level. Malaysia has a long way to go in areas like corporate governance and risk management.
Malaysian
economy is export oriented, dominated by intermediate
manufacturing. It has expertise in producing quality
electrical and electronic products. It has a strong
and dominant presence of private industries. Its market
capitalism policies have been attracting continuous
and substantial foreign direct investment.
Like
other South East Asian neighbors, Malaysia has been
adversely affected by the economic crisis of 1997,
though not as severely as South Korea, Singapore and
Hong Kong. The over exposure of the banks to sensitive
sectors besides big corporates without reference to
their business requirements or profitability were
the main reasons for the crisis, which was triggered
by massive and sudden withdrawal of foreign funds.
Malaysia has learnt its lessons and embarked on suitable
economic reforms, which resulted, by and large, in
the required corrections. |
