Asia banks turn to 'diplomats' as regulatory burden bites

Tue May 6, 2014 5:35pm EDT
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By Rachel Armstrong

SINGAPORE (Reuters) - Banks have a new buzzword to describe their strategy in Asia: diplomacy.

Stung by regulatory probes into allegations ranging from the hiring of the offspring of senior state officials in China to rate manipulation in Singapore, and grappling with reams of new rules brought in after the global financial crisis, firms are going on a charm offensive with the region's regulators and governments.

Executives brought in to head banks' businesses in major Asian financial centers are now expected - by management and regulators themselves - to devote more time to building their relationships with financial watchdogs.

"Regulators have become major stakeholders - as important as big corporate clients - so firms are recognizing how key they are for business," said Judy Vas, regulatory leader for Ernst & Young's financial services business in Asia.

Barclays recently promoted its Asia head of tax, Li Li Kuan, to become country head for Singapore, stressing one of her primary duties was to manage "regulatory relationships" in the city-state.

Her appointment was relatively unusual, given country head roles are more often filled by "rainmakers" - corporate or investment bankers there to close deals and look after major clients. But priorities are starting to shift.

JPMorgan brought in former DBS Vickers boss Edmund Lee as its Singapore head last year, replacing Philip Lee, who had been more focused on investment banking clients, noting one of his key duties would be to manage relationships with the government and regulators.

Thomson Reuters Cost of Compliance survey found compliance teams at finance firms in Asia saw the biggest rise in 2013, compared with other regions, in the amount of time they spend preparing reports for their management boards. More than a third of teams in Asia spent at least one day a week on this work, compared with around 20 percent in 2012.   Continued...

A general view of the HSBC building in Singapore October 11, 2008. REUTERS/Tim Chong