Sri Lanka banks told of joint venture opportunities

[CSE.SAS]

Banks in countries like Sri Lanka could look at joint ventures with big Western financial institutions seeking to expand in emerging markets, a senior American banker said.

Joint ventures between Western and local banks make better sense than big foreign banks trying to compete in emerging markets against local players, said James Quigley, executive vice chairman for international corporate and Investment banking at Bank of America Merrill Lynch.

"I think we've all learned that you cannot be everything to everybody. It is a failed strategy," he said in a speech at a meeting of the Asian Bankers Association in Colombo recently.

"Bank of America cannot be everything to everybody, it would be a failed strategy."

Western banks cannot expect to compete with local banks in emerging markets.

"You cannot come into countries like Sri Lanka and India and look to compete in lending to SMEs (small and medium enterprises) and retail investors because we just do not have the local expertise and the depth of distribution," Quigley said.

"So the JV models make sense.

"If you can identify joint venture metrics in corporate banking, leasing, in particular products in which you have an expertise or any other Western bank has expertise, I think you'll see a move towards that."

Quigley also said talk of lack of liquidity in the financial system was a myth with big banks awash with funds that ar not lent for lack of confidence.

"Bank of America currently has almost 500 billion US dollars in excess liquidity it is managing in its New York treasury department," he said, noting that he had been told recently by a big Japanese bank that it has 650 billion dollars.

"So you have two banks with almost 1.2 trillion dollars in excess liquidity sitting on their balance sheets. Confidence can mobilize this liquidity."

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[Rajaraam]

Thank u CSE.SAS. I like the content of this article. When the Banks in USA and EU tend to spread their business in emerging countrie like SL we can expect a significant growth in our banks and financial Institutions. Our banks/financial institution at present are playing well with creative products.Under JV model those institions could go beyond the boundary and expand in other Asian countries.Already some banks are operating in very small scale in foreign countries and they have proved they are competitive. With JV model they can raise more funds need for expansion.