HSBC: New players must be innovative

By Adeline Paul Raj

Published: 2010/07/05


THE chief of HSBC Bank Malaysia Bhd isn't nervous about new foreign players entering the Malaysian market, but hopes they will be innovative and not just replicate products and services already available here.



"What's important to understand is that we need new players to drive growth. What can't be the case is that the new players replicate what is already available because that would not be beneficial to the industry.



"So we're hoping the new players will add value, add to market size and market capacity, and that will create opportunities for everybody and strengthen the sector," its deputy chairman and chief executive officer Mukhtar Hussain said in an interview.



Malaysia last month allowed five foreign commercial banks to set up operations here as part of an ongoing liberalisation of the financial services sector.



The five were Japan's Mizuho Corporate Bank and Sumitomo Mitsui Banking Corp, France's BNP Paribas SA, Indonesia's PT Bank Mandiri and the United Arab Emirates' National Bank of Abu Dhabi.



This brings to total 19 commercial banking licences that Malaysia has issued over the years to foreign operators.



Hussain, who took the helm at HSBC in December last year, said the group is used to having many competitors in other countries that it operates.



"Liberalisation in itself is welcomed ... but the sector has to provide value and innovation," he remarked.



He pointed out that this was necessary as Malaysia is already a well-served market in terms of the number of financial institutions, relative to the size of the overall country.



"I think the dangers are that the market doesn't innovate and doesn't grow, and therefore competes within an existing sphere of activity. That would be challenging because it ultimately drives down pricing. Those are issues that need to be thought about very carefully," he said.



While he thinks there seems to be signs that new innovations are coming into the market as the economy picks up, he felt that the innovation has to be constant and present in both the conventional and Islamic banking space.



"There's more to be done and we look forward to playing our role in that," he said.



HSBC, whose presence in Malaysia dates back to 1884, is different from other foreign banks here in that it is "a truly global institution", with none of its rivals beng as large in terms of international focus, Mukhtar claimed.



It also has the largest branch network and number of staff, he added. HSBC currently has 40 conventional branches and six Islamic branches, and employs more than 5,000 people in Malaysia.







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