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Fifth Annual Cass-Capco Risk Management Conference
April 19, 2012: Cass Business School, London, UK

The fifth annual conference of the Cass-Capco Institute on Risk brought together practitioners and academics to discuss how risk can be managed to lessen its impact on business and economic growth... Read More

Banking in the “Glocal” World
March 1, 2012: Zurich, Switzerland

Swiss Finance Institute and Capco Institute were pleased to present the Inaugural Annual conference of the SFI-Capco Institute Paper Series on Banking in Zurich, Switzerland. The conference brought together leading financial experts and scholars to discuss... Read More

Asian Bank Expansion in the United States

Tigers on the Prowl

This Capco Thoughts white paper highlights recent developments that signal the emergence of Asian banks, including their growing interest in the U.S. and North American financial services markets. It examines factors contributing to the favorable position enjoyed by both large and mid-tier Asian banks and how these institutions are capitalizing on opportunities. The paper also discusses the key decisions Asian banks will need to make regarding whether to build their presence in new markets or buy existing institutions as they expand globally; how regulatory conditions may affect their strategies; and what benefits their expanded role may bring to global financial markets.

Asian banks are poised to take a major role in the global financial system. They are well capitalized. They have largely avoided the pains of the financial crisis. And they benefit from some regulatory advantages, at least for the moment.

Where and how are Asian banks likely to direct their resources and energy? Chinese, Japanese and other Asian firms have the resources to assume a major presence in the global financial system. They have healthy balance sheets and ample investment dollars, and they stand to benefit from currency fluctuations and monetary shifts.

Recent legislative and regulatory developments, including the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States and Europe’s Basel III rules, will affect how Asian banks do business and make acquisitions abroad. These requirements will increase the importance of systems, compliance, reporting and operations setups as these banks take stakes in and operate in the United States and other markets.

Global trends in currency, capital availability, regulation and market movements during the financial crisis have helped thrust Asian institutions into the forefront of global finance. The strong emergence of China and Japan, and signs of China-like growth in South Korea, Singapore and Malaysia, suggest they will be there for some time to come. Capco believes this trend will be beneficial to the industry as a whole, as well as ameliorate risk within the global financial system.

Capco understands that Asian institutions will face challenges as they adapt to different strategic, operating, regulatory and reporting requirements as they enter U.S. and global markets. We believe the strategic decision whether to buy or build will be extremely important in determining future operating models for these banks. The manner and business scope of their entry into markets, as well as changing regulatory structures, will largely determine the fates of these acquisitions and build-outs. By pursuing measured growth, operating in a risk-aware manner and building a strong international brand, Asian banks can assume a major role in the United States and elsewhere.