The initiative is part of the April 2019 bilateral agreement between BNM and BOT under the ASEAN banking integration framework.
BNM (Bank Negara Malaysia) and BOT (Bank of Thailand) invite banks from Thailand and Malaysia to express interest in becoming an ASEAN Qualified Bank (QAB) in Malaysia and Thailand.
The initiative is part of the April 2019 bilateral agreement between BNM and BOT under the ASEAN Banking Integration Framework (ABIF). The bilateral agreement and its commitments are part of the ASEAN Framework Agreement on Services (AFAS).
A joint BNM-BOT statement says QABs are being considered to facilitate greater intra-ASEAN trade and investment in the region, in line with the ASEAN Economic Community Master Plan 2025 which aims to create an integrated ASEAN economy and highly cohesive.
A strong and well-managed bank
Under the QAB arrangement, a Malaysian commercial bank will be able to establish a banking subsidiary in Thailand (i.e. a Malaysian QAB), while a Thai commercial bank will be able to do the same in Malaysia.
To ensure the financial stability of both countries, a QAB candidate, whether a new entrant or an existing bank in the host country, must be a “strong and well-managed bank” whose interest is supported by the regulator of the home country; and comply with the prudential requirements of the host country.
A successful QAB candidate will benefit from market access and operational flexibilities granted under the bilateral agreement. The two countries have agreed to grant benefits on a reciprocal basis.
Each country will not allow more than three QABs, including existing commercial banks.
Currently, two Malaysian banks (CIMB and RHB Bank) are doing business in Thailand and one Thai bank (Bangkok Bank) is doing business in Malaysia. These banks can convert their current licenses to QAB in order to gain more flexibility for future expansion.
Malaysian banks seeking to operate in Thailand under the QAB deal can offer services at up to 40 locations (including branches, ATMs and kiosks) and must have at least THB 15 billion ( US $ 455 million) of capital, according to the rules notified in the Royal Gazette.
According to BNM Governor Ms. Nor Shamsiah Yunus, the QAB bilateral agreement will benefit the people of Malaysia and Thailand, allowing them to enjoy better banking convenience as well as access to a wider range of banking products. .
“We are making great strides towards creating an integrated and cohesive ASEAN economy,” she said. “We are confident that the QAB agreement will foster more business opportunities and economic activity between the two countries to both facilitate our economic recoveries amid the ongoing pandemic.”
BOT Governor Sethaput Suthiwartnarueput said the bilateral QAB deal marked another important step for deeper regional financial integration and would result in a “wider range of high-quality financial products”.
“Our aspiration is to see the QAB agreements pave the way for further financial cooperation among ASEAN members as the region embraces new financial innovations,” he said.
Thailand is in talks with Indonesia, the Philippines and Myanmar on similar arrangements. Malaysia has reportedly concluded negotiations with Indonesia and the Philippines.