BY KOH HUI THENG

ASIA is the financial hotspot for global banks now, with under-leveraged customers and countries capable of additional stimulus if need be, say two banking experts.

Mr Vasu Menon, OCBC Bank's vice-president of wealth management (Singapore), told my paper that the region has a lot going for it.

"Asia's banking sector is in a better shape than the West's and its consumers are under-leveraged (with little debt and excessive savings).

"Companies are lowly-geared and governments in the region have the means to launch further stimulus packages if need be."

The financial crisis has proven to be a blessing in disguise, too.

It highlighted Asia's strengths to international investors, resulting in a significant inflow of money to Asian bourses this year.

For instance, net inflow to Asian funds excluding Japan has hit S$20.7 billion so far this year and could even exceed 2007's bull run of S$23.2 billion.

Mr Chris Kyle, chief financial officer for global banking and markets at the Royal Bank of Scotland (RBS), said that the downturn has brought home the importance of "maintaining good balance sheets and transparent management practices".

Post-crisis, international banks and financial institutions need an in-depth approach because of limited resources.

This differs from the pre-downturn days, when banks could simply plan for growth.

While Asia will "offer far better growth opportunities" in the days ahead, banks have to be nimble in seizing capital-market opportunities.

This is especially crucial in Asia, where both developed and developing economies are clustered.

"Asian banks are known for their close personal contact with customers. And we do have to be a lot closer to clients in regions where the franchise is smaller," Mr Kyle said.

Despite the bullish outlook, markets here also come with risks.

Asian bourses are prone to speculative capital inflows and outflows as they do not have the same depth as developed markets.

Asian equities, with their risk proposition, may appeal more to investors with a strong risk appetite.

Edinburgh-based RBS has been severely tested by the financial meltdown.

This month, it reported third-quarter operating losses S$3.5 billion. Last month, about 70 staff quit its private-banking arm, RBS Coutts, a move that the Financial Times said was because of bonus prospects.

Mr Kyle was in town for this week's inaugural Financial Services and Banking Forum 2009, co-hosted by RBS and recruitment consultancy Robert Half.

Singapore is one of RBS' four Asian hubs.

kohht@sph.com.sg

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