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Home grown talent gears up for big deals

Impending full liberalization of Malaysia's banking system is encouraging local players to grow their investment banking business, with RHB Sakura and CIMB taking the lead.

Malaysia's local players encouraged to grow
banking business

AS MALAYSIA'S FINANCIAL sector continues to recover from the 1997-98 economic crisis, investment banking is playing a more prominent role and, unusually for an emerging market, it is largely local investment banks that are at the forefront.

True, the biggest deals from Malaysia are still led by the the global players, since jumbo international deals require the international distribution that only they can provide. Nevertheless, the domestic market has been transformed. Foreign investment banks dominated the local debt market until the mid-1990s but most have either disappeared or been left behind. Deutsche Bank, Citigroup, ABN Amro and HSBC are the only active foreign banks in the domestic capital markets. Local players such as Commerce International Merchant Bankers (CIMB), RHB Sakura, Am Merchant Bank, and Aseambankers now dominate.

And this market is growing at a healthy clip, partly as bank loans are transformed into bonds. The total bond market has doubled in size in five years and CIMB expects the primary market to grow by 40% this year.

The Malaysian banking system is due to be liberalized under World Trade Organization rules over the next few years but is still protected from the full force of foreign competition.

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