Mukhtar Hussain
KUALA LUMPUR: Big capital banks face the challenge of duplication in the financial system’s consolidation phase due to similarities that cause difficult decisions to occur, said deputy chairman and global chief executive officer of HSBC Bank Malaysia Bhd, Mukhtar Hussain.
However, he said circumstances were different between smaller and big capital banks.
“Maybe, smaller banks would benefit from larger caps and synergies in terms of being able to complement each other, by geography and business type,” he told Bernama after the CEO’s Roundtable Banking-in-Progress session at the 15th Malaysian Banking Summit here yesterday.
He said consolidation in the financial system could only occur if there was symmetry in views amongst the various parties involved in the decision.
Mukhtar said there had to be a convergence of opinions among shareholders, regulators and customers, that what was being proposed in the consolidation move makes economic and strategic sense.
“There’s further scope for consolidation in the financial sector and it requires sponsorship from shareholders and regulators.
However, realising this is a challenge,” he added.
On further liberalisation in the financial sector, he said it brought both opportunities and challenges in the industry.
“In the context of opportunity, the liberalisation move introduces new players into the market, which could help to grow its size, depth and diversity as well as bring on board innovation and better connectivity.
“Nevertheless, the key challenge would be if, there are more players in the market that is not growing larger.
“Obviously then, it leads to excessive competition and is potentially dangerous in terms of mispricing,” he added.
The coming years were looking to be both an exciting and challenging time for both the banking and financial sector as it crossesed the threshold onto the global stage. — Bernama