KUALA LUMPUR (April 12): Malaysian banks that are focusing on regional expansion appear to be moving in the opposite direction from a trend of global banks pulling out of Southeast Asia, according to the World Bank.
"Regional banks such as CIMB and Maybank are becoming stronger and their cross-border activities are growing, while some of the global banks are actually scaling down and deleveraging in Malaysia," said Jose de Luna Martinez, lead financial sector specialist at the World Bank.
This may be because regional banks feel more connected to customers in the region, since a large portion of their base comprises retail deposits, he explained.
"Their clients also are doing more cross-border activities, giving these regional banks more stability," Martinez told reporters at the launch of the World Bank's Global Financial Development Report 2017/2018 today.
Despite the decreased activity from global players, Malaysia is still recognised as an attractive destination for international banks because it has been adopting the best standards of regulatory and supervisory practices, Martinez said.
"Malaysia is very dynamic, it's growing very rapidly, and it's a good place for international banking activities," he said.
The World Bank had today updated its gross domestic product growth forecast for Malaysia to 5.4% in 2018 from 5.2% previously.
The withdrawal of these global banks from the region could be due to constraints from their home countries, said Ata Can Bertay, a research economist in the World Bank's development research division.
"For example, Citibank had been asked to scale down its overseas operations," he told theedgemarkets.com.