New regulation pushing Western finance firms eastwards

The regulatory overhaul in western economies is accelerating moves by the
finance industry to do more business in Asia, according to a
survey of global business leaders released on Monday.
Executives questioned by international law firm Allen &
Overy (A&O) were mainly in favour of countries harmonising their
regulatory regimes.
However, the report said, national political interests
appeared to be trumping international co-ordination, meaning the
regulatory landscape was looking increasingly fragmented.
Alan Ewins, a regulation partner at A&O's Hong Kong office,
said the trend of finance moving to east from west began with
the financial crisis as firms seek better growth.
"One only needs to look at the pattern of job losses in
financial services in Europe and the hiring that is going on in
Asia to see that banks are reallocating their resources."
The report found 62 percent of executives surveyed wanted
more regulatory harmonisation, with the most support coming from
those in India, Singapore and Thailand. Some 65 percent of
executives in South Korea wanted less harmonisation.
LURE OF GROWTH
Asian countries have all signed up to the G20 group of
leading economies' commitments to regulatory change, including
tougher rules on bank capital and derivative trading.
The G20's regulatory task force, the Financial Stability
Board, launched its Asian consultative group of regulators and
central bankers from across the region on Monday.
The consultative group discussed the impact of the new
global framework that will impose capital surcharges on the
world's biggest banks, known as G-SIFIs, and the risk of
spillover into Asia of the euro zone debt crisis.
FSB Secretary General Svein Andresen said he was not aware
banks were moving operations to Asia for regulatory reasons.
"If they are doing so for regulatory reasons, it cannot be
because of the G-SIFI requirements, because those would apply to
these institutions wherever they are," Andresen told reporters.
"If financial institutions in other parts of the world are
moving operations or expanding operations in Asia, then no doubt
that has what to do with the fact that economic activity in the
region is high and high wealth is accumulating," Andresen said.
Asia fared relatively better during the financial crisis
than Europe and the United States, with governments not facing
the same political pressure for a complete rewriting of
regulatory rule books.
"While the west seems to be focused on constraining business
through regulation, the east is doing all it can to harness the
potential of business to fuel growth. The competition between
markets to attract business is only going to intensify," Ewins
said.
While financial institutions may be keen to shift more
resources over to Asia, the survey found China was seen as the
toughest market to enter, with 20 percent of respondents naming
it ahead of the United states which had 18 percent.

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