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BNM appoints new assistant governor

KUALA LUMPUR: Bank Negara Malaysia has appointed Aznan Abdul Aziz as assistant governor effective July 1, 2019.

Aznan will be responsible for the payments oversight, financial conglomerates supervision, banking supervision, insurance and takaful supervision as well as risk specialist and technology supervision departments.

Prior to his appointment, Aznan served in several departments in the central bank including financial conglomerates supervision, governor’s office, Islamic banking and takaful, financial surveillance, financial sector development, financial intelligence and bank regulation departments.

He holds a degree in Economics and Accounting from the University of Bristol, UK.


Bank Negara: Financial Threat Intelligence Platform operational before year-end

KUALA LUMPUR: Bank Negara Malaysia (BNM) expects to operationalise the Financial Threat Intelligence Platform before the year-end as part of its efforts to strengthen platforms for collaboration in building a safe environment for innovation.

Governor Datuk Nor Shamsiah Mohd Yunus said the central bank, together with the financial industry, is in the process of establishing the platform.

“The platform will collate, analyse and disseminate real-time information on cyber threats and trends to strengthen the detective capabilities of the industry against such threats,” she said at the opening ceremony of MyFintech Week 2019 here today.

The central bank’s ongoing efforts to build an enabling yet safe environment for innovation also include building inter-operable infrastructures. This will start with open and fair access to a shared payment infrastructure for banks and non-banks alike.

“It is also important to recognise the need for other digital public infrastructures as key enablers to harness the full potential of fintech. These include having a national digital identity system, framework for open API (Open Application Programming Interface) and open banking, clear cloud policy and nationwide broadband connectivity.”

Nor Shamsiah said BNM is further differentiating its regulatory and supervisory approach to capture new sources and transmission of risks while allowing room for experimentation and for firms to develop economies of scale.

“An important objective will be minimising regulatory arbitrage, which can lead to risks building up in parts of the financial system that may be subject to differentiated regulations. We anticipate that this will call for a much more dynamic approach to regulation and supervision as well as better communication of regulatory developments going forward.”

Nor Shamsiah called for a financial system that is relevant, safe and socially responsible. For example, as the country moves towards becoming a digital economy, the financial sector must accord adequate support to innovative small and medium enterprises, such as those involved in e-commerce. Equally important, she said, this imperative is not only for banks, but extends to the other parts of the financial sector.

“Non-banks such as venture capital and private equity firms, as well as alternative financiers such as factoring and leasing companies, have an equal stake in this and should also play a more active role in financing the needs of businesses.”

Nor Shamsiah said the ability of finance to mobilise capital, create leverage and distribute risk allows it to be a powerful force for good. But excessive and unbridled risk-taking creates instability which is harmful not only for the particular firm, but the economy and society at large.

She said fintech holds enormous potential to enhance competition, increase productivity, address unfulfilled consumer demand and fundamentally change the way institutions provide financial services.

Similarly for Islamic finance, adoption of technology could present significant opportunities to reduce the cost of financial intermediation and expand access. For example, distributed ledger technology could enable automated execution of contracts through the use of digital protocols, or smart contracts, which can simplify complex syariah contractual processes.

International Monetary Fund financial counsellor and director Tobias Adrian said new technologies, such as blockchain, are at the core extremely safe, but around these safe technologies are business models that are potentially vulnerable.

“Risk managers of financial services companies always say the number one risks are cyber risks. For the moment, we have not seen a systemic failure such as the 2008 crisis due to cyber attracks, but the potential is there. The financial system is only as safe as the weakest link is safe. Cyber risk is certainly one considerations that we must ever mind from policy and business.”

He sees that over the next couple of years, there will be a debate among global regulatary standards for new technologies.

“In most countries, fintech for the moment is not yet systemic and so the regulators have not moved to global regulatory standards for the fintechs. In some countries, we do see large and sometimes systemic risks emerging from new technologies and fintech. Looking at the regulations for fintech around the world, on one hand we see fragmentation, on the other a race to the button in certain jurisdictions,” Adrian said during a panel session at the event.


BNM: Financial Threat Intelligence Platform by year-end

KUALA LUMPUR: Bank Negara Malaysia (BNM) expects to operationalise the Financial Threat Intelligence Platform before the year-end as part of its efforts to strengthen platforms for collaboration in building a safe environment for innovation.

Governor Datuk Nor Shamsiah Mohd Yunus said the central bank, together with the financial industry, is in the process of establishing the platform.

“The platform will collate, analyse and disseminate real time information on cyber threats and trends to strengthen the detective capabilities of the industry against such threats,“ she said at the opening ceremony of the MyFintech Week 2019 here this morning.

Its ongoing efforts to build an enabling, yet safe environment for innovation also includes building interoperable infrastructures. This will start with open and fair access to a shared payment infrastructure for banks and non-banks alike.

“It is also important to recognise the need for other digital public infrastructures as key enablers to harness the full potential of fintech. These include having a national digital identity system, framework for open API and open banking, clear cloud policy and nationwide broadband connectivity.”

She said BNM is further differentiating its regulatory and supervisory approach to capture new sources and transmission of risks while allowing room for experimentation and for firms to develop economies of scale.

“An important objective will be minimising regulatory arbitrage, which can lead to risks building up in parts of the financial system that may be subject to differentiated regulations. We anticipate that this will call for a much more dynamic approach to regulation and supervision as well as better communication of regulatory developments going forward.”


Financial Threat Intelligence Platform by year-end

KUALA LUMPUR: Bank Negara Malaysia (BNM) expects to operationalise the Financial Threat Intelligence Platform before the year-end as part of its efforts to strengthen platforms for collaboration in building a safe environment for innovation.

Governor Datuk Nor Shamsiah Mohd Yunus said the central bank, together with the financial industry, is in the process of establishing the platform.

“The platform will collate, analyse and disseminate real time information on cyber threats and trends to strengthen the detective capabilities of the industry against such threats,“ she said at the opening ceremony of the MyFintech Week 2019 here this morning.

Its ongoing efforts to build an enabling, yet safe environment for innovation also includes building interoperable infrastructures. This will start with open and fair access to a shared payment infrastructure for banks and non-banks alike.

“It is also important to recognise the need for other digital public infrastructures as key enablers to harness the full potential of fintech. These include having a national digital identity system, framework for open API and open banking, clear cloud policy and nationwide broadband connectivity.”

She said BNM is further differentiating its regulatory and supervisory approach to capture new sources and transmission of risks while allowing room for experimentation and for firms to develop economies of scale.

“An important objective will be minimising regulatory arbitrage, which can lead to risks building up in parts of the financial system that may be subject to differentiated regulations. We anticipate that this will call for a much more dynamic approach to regulation and supervision as well as better communication of regulatory developments going forward.”


BNM highlights pressing need for better national strategy on cybersecurity

KUALA LUMPUR, June 17 — There is a pressing need for the financial industry and nation to provide an enabling and secure framework for technological innovation, said Bank Negara Malaysia (BNM) governor Nor Shamsiah Mohd…


HSBC: No further cuts in OPR this year

KUALA LUMPUR: There will be no more reductions in Bank Negara Malaysia’s Overnight Policy Rate (OPR) this year and it is expected that the next cut will only happen next year given the resilient Malaysian economy, according to HSBC Private Banking.

Its chief market strategist for Southeast Asia James Cheo described the OPR reduction last month as a “pre-emptive cut”.

“There are fears in the market that they (Bank Negara) will keep cutting (OPR) but the economy is still sound and there is no real need to make further cuts,” he told a press conference on the HSBC Private Banking 2019 2H Investment Outlook in Asia today.

“From now to the end of the year, BNM will be on hold in terms of policy rates and depending on the situation next year, they will assess the situation,” he added.

HSBC Private Banking has forecast Malaysia’s gross domestic product growth to stay firm at 4.5% in 2019 and 4.3% in 2020, as private consumption is going to remain robust despite a more uncertain global trade environment.

Cheo said Malaysia’s economy is expected to stay resilient, driven by strong consumer spending and a diversified export base. The resilience of consumer spending is a reflection of a relatively tight labour market and steady wage growth.

“Malaysia is more resilient than what most people think. To sum it up, the Malaysia economy still ‘boleh’ (can),“ he said.

It expects private consumption to remain one of the key drivers of growth for the remainder of the year, driven by a stable labour market and supportive fiscal and monetary policy.

“It (consumption) can hold up at about 6% this year because the labour market is strong, wages are rising with a young working population. This will be the engine to power Malaysia’s economy and we don’t see that waning.”

He said investments are soft so far but there is a good chance of thempicking up in the year-end or next year as public infrastructure projects start to come in.

Malaysia’s economy is expected to stay resilient, driven by strong consumer spending, says HSBC Private Banking’s James Cheo. – REUTERSPIX


Premiums won’t go up for current ILP policyholders: LIAM

KUALA LUMPUR: Insurance premiums will not be going up for current investment-linked product (ILP) policyholders following the implementation of new guidelines for ILPs by Bank Negara Malaysia (BNM) on July 1, 2019, says Life Insurance Association of Malaysia (LIAM).

CEO Mark O’Dell said the premiums for ILPs bought before the guidelines come into effect should sustain the policy for the full contract term.

“Nothing changes after the guidelines are in effect,” he told Bernama in an interview recently, quashing the misleading information by insurance agents who claimed that the premiums would be going up following the introduction of new guidelines.

BNM issued the Policy Document on Investment-linked Business in January this year, with the primary objective of protecting the interest of consumers.

The document introduced several key initiatives, including the minimum standard of sustainability tests and minimum allocation rate to protect the account values of ILP policy/certificate owners.

The disclosure of the sustainability of coverage aim to improve transparency at the point of sale and ensure that consumers are provided with sufficient and timely information to facilitate active management of their ILP policies.

“Starting from Jan 1, 2020, you will receive an annual statement telling you the length of your coverage based on your current premium. If you find you need a longer coverage, you can voluntarily increase your premium payment,“ said O’Dell.

He noted that it was important to differentiate between policies bought before July 1 and new policies purchased after the date, as insurance companies would quote premiums for the entire contract term as required by the central bank.


BNM international reserves slip 0.5% to US$102.3b as at May 31

PETALING JAYA: Bank Negara Malaysia’s (BNM) international reserves mounted to US102.3 billion (RM425.5 billion) as at May 31, 2019, 0.5% lower than the US$102.8 billion (RM427.5 billion) as at May 15, 2019.

The central bank said in a statement that the reserves position is sufficient to finance 7.3 months of retained imports and is 1.1 time total short-term external debt.


Fixed deposit – still an attractive investment?

PETALING JAYA: Fixed deposit (FD) is low risk and great to invest in, but is it a less attractive investment avenue now due to the lower interest rate environment?

Following the cut in Bank Negara Malaysia’s Overnight Policy Rate (OPR) to 3% last month, banks have lowered their base rates and base lending rates, translating into lower cost of borrowing, but also a decrease in fixed deposit and saving account interest rates.

HLIB Research analyst Chan Jit Hoong opined that FD is not necessarily less attractive now given the lack of good alternatives in the market.

“For example, equities are going through a rough patch now, so generating capital returns would be rather difficult. For those who want assurance in returns, they would still stick with FD. That said, for the take-up rate of FD, we are already observing some tapering effect from the recent Bank Negara Malaysia (BNM) statistics – probably due to high base effect,” he told SunBiz.

For example, RHB Bank Bhd has revised its base rate and base lending rate downwards by 20 basis points (bps) effective May 13, 2019, to 3.80% per annum from 4.00% previously, and to 6.75% per annum from 6.95%, respectively. RHB Bank’s fixed deposit rates were also revised downwards by 20 bps.

Generally, Chan said, the difference for FD board rates before and after the OPR cut is equal or less than the 25bps OPR cut, and most banks have reduced their FD rates.

FD rates in the market vary from bank to bank, with their tenure typically ranging from one month to 60 months, such as from 2.80% (three months tenure) to 3.90% (60 months tenure).

“Board FD rates a bit on the low side. Aim for those promotional FD rates,” Chan recommended, adding that Islamic and conventional FD rates are largely comparable.

On “negotiable” rates, he explained that this is usually done over the counter and takes into account other considerations, include the size of the FD.

“This is highly dependable on bank’s strategy on whether to lock up their FD exposure based on different interest rate expectations.”

Chan said FD is important to banks as it makes up more than 50% of total deposits base. In the race for deposits, he expects more competitive pricing as product differentiation is limited. Although this will hurt banks’ margins, he sees competition easing in recent months.

FD typically provides investors with a higher rate of interest than a regular savings account until the given maturity date. But unlike savings accounts, the money cannot be withdrawn from the FD account before maturity. Some FD accounts, however, allow partial withdrawals subject to terms and conditions.

Besides conventional and Islamic FDs, banks also offer other FD accounts such as those for senior citizens, e-FDs, foreign currency FDs, accounts with quarterly interest crediting, flexible FD accounts and more. FD accounts typically enjoy higher interest rates in a rising interest rate environment.

AllianceDBS Research said the OPR cut will pile more pressure on the banking sector’s net interest margins, which have so far been depressed from keen competition for deposits.

It said banks with larger proportions of variable rate loans in their overall books vis-à-vis their fixed deposits base will be most affected by the OPR reduction. In this sense, Alliance Bank Bhd and BIMB Holdings Bhd would face the greatest short-term squeeze – variable rate loans account for 90% and 91% of their respective gross loans.

“Variable rate loans would likely be repriced within a short period; fixed deposit rates would take longer as the revised rates are only reflected upon maturity,” AllianceDBS said.

This means that existing FD accounts before the OPR cut would still enjoy the previous interest rates until their maturity; while new FD accounts would be subjected to the new rates.

BIMB expects the effect from the OPR cut to be temporary, but foresees a neutral impact in its full-year earnings for 2019, helped by the boost in its fee-based income from wealth management and bancatakaful.


Bank Negara: Banks’ asset quality robust

KUALA LUMPUR, May 31 — Banks’ asset quality remains sound with overall net impaired loans ratio remaining stable at 1.0 per cent, said Bank Negara Malaysia (BNM) in its “Monthly Highlights — April 2019” released today. …