Shifting FSI ownership, bank consolidation and Fintech: Assessing the banking landscape in Asia & investing into FSI’s

The world of financial services institutions is undergoing profound changes and fundamental reforms. The rise of a more stringent regulatory environment is greatly impacting the cost of and returns on capital hurdles. This affects the Pan-Asian ownership structure from regional and global players to more niche and local players.

This change of regulatory requirements had already resulted in some large deals in this sector including the sale of Standard Chartered’s consumer finance business in Shenzhen and Hong Kong to a consortium that included a Chinese state-owned firm and we continue to observe M&A activity across the FSI sector.

Each market in Asia has its own nuances and the need to apply local knowledge and integrate it into a regional context has led to most Southeast Asian countries starting to undergo consolidation in their respective home markets. Aimed at reducing fragmentation and structural risk, domestic banks are seeking fresh flow of capital not only through building scale through transactions but also through fresh capital injections, mergers & acquisition.

One example of capturing fresh capital flows is the Vietnamese banking sector which, under the direction of the State Bank of Vietnam and the Vietnamese government, is going to reduce the number of organizations from 40+ down to 20. This initiative is aimed to increase the capability and competitiveness of Vietnamese banks and opens the door to foreign investors.

Another trend driving investments across the FSI sector is bank’s acquisition of new technologies and Fintech especially on the so called ‘game changers’ with particular focus on big data & analytics, mobile and wireless, payments, risk management, security, and compliance.

Further, the impact of Solvency III rules is putting pressure on banks to sell off their insurance assets and other regulations are adding to the complexity across Asia-Pacific as solvency requirements, increasing use of international accounting standards and risk management is continuing to fuel the deal flow in 2016 and beyond.

Key working sessions and dialogues include:

• Investing into local banks
• Co-investment opportunities
• Buy & selling of distressed FSI assets & debt
• Acquisition of banc assurance businesses
• Challenges surrounding M&A deals such as financial due diligence
• The rise of disruptive & game changing technologies