Standard Chartered veteran Neil Daswani surveys the Hong Kong skyline as it is battered by storms which though appear dark and menacing, he assures that they are typical for this time of year. There’s little disruption to the smooth running of this financial centre because of the endless wind and rain – everything is working and the tall towers of commerce hold steady.
Much like September’s storm, the credit market turbulence created by 2007’s ‘Hurricane Subprime’ – the toxic brew carried over from the US – has tried and largely failed to unsettle Hong Kong’s rhythm, unlike the kind of mayhem it wrought on the developed markets to the west.
“The Asian financial crisis was when we did a lot of our learning,” he says, now head of transaction banking for Standard Chartered’s north Asian markets, including Greater China (mainland China, Taiwan, and Hong Kong), Japan and Korea. “The lessons we learned back then have worked in our favour today.”
Back then, in 1997-1998, a young Mr Daswani was working between Dubai and Singapore (which is still the business headquarters of Standard Chartered). Singapore’s growth during that period ground to zero; Indonesia’s long-term debt was downgraded to junk; the Hang Sang Index, Hong Kong’s stock exchange, fell 23 per cent in a single week. Virtually all ASEAN [Association of South-East Asian Nations] currencies had to stomach massive devaluations that exacerbated conditions for the thousands of local companies that had borrowed in US dollars.
“My role during that period was largely in cash and liquidity management, in providing firms with greater control and visibility, and improving their liquidity processes at a time when there were a lot of corporates going cross-border or multinational for the first time,” explains the former head of securities services who has been with Standard Chartered since 1991.
Mr Daswani’s promotion to head of transaction banking for North Asia from global head of securities services late last year, lead to his remit tilting from the vertical (single product, multi-region) to the horizontal (three product streams, three regions).
Transaction banking, which is part of Standard Chartered’s wholesale banking business, revolves around securities services, trade services (including the increasingly vogueish, supply chain finance) and cash and liquidity management.
“My current challenges are now more frontline, closer to a wider customer base and working with them to come up with effective and new working capital strategies,” says Mr Daswani, who reports to Karen Fawcett, head of transaction banking for the entire group. “My previous job was more about developing solutions for the fund managers, broker dealers and global custodians, insurance companies and all those players in the investors and intermediaries client segment worldwide. Now I have regional responsibility for all these client segments, including local and global corporates, and banks, as well as investors and intermediaries.”
Standard Chartered derives around 80 per cent of its revenues from non-US/non-European markets, with Hong Kong’s ‘gateway to China’ the single largest market for commercial banking in north Asia.
But with storm clouds building across the South China Sea and heading right in the direction of Hong Kong’s famous harbour, the conversation swings back to the wild days of August 1998. At the time, the Hong Kong Monetary Authority (HKMA) announced it would protect the currency (the Hong Kong dollar) “at any cost” from speculators, concerned by the tumbling of currencies in Thailand, Indonesia, and Malaysia. At one stage this involved hiking interest rates to 500 per cent from a modest 20 per cent weeks earlier.
“One thing the Asian crisis did for the financial community was induce a healthy balance of being extremely vigilant in protecting stakeholders but also of being accepting of change,” notes Mr Daswani, presenting his take on the regulatory regimes in the Hong Kong region that have been praised for their thoroughness in recent years. “I saw this first hand as head of securities services: the fact that regulation was liberalised on a pan-Asia basis to permit outbound investment flows to flourish is a case in point, and this has over time gathered pace, particularly with the QDIIs (qualified domestic institutional investors) showing signs of a revival of late,” he adds.
Singapore and Hong Kong are more evolved at a regulatory level, the latter a conduit for fund flows between Greater China and surrounding markets and reckoned to have the most sophisticated regime in Asia.
Mainland China offers a more knotty challenge for Standard Chartered’s ambitions, in that there are regulatory regimes at both the provincial/regional and centralised/state level. Says Mr Daswani: “It is an interesting example of two levels of regulation adding to the complexity of running banking businesses in Greater China.”
That said, the recent liberalisation of rules governing the repatriation of assets held by Taiwanese firms based on the mainland, changes to listing directives on local bourses, and the general enthusiasm of mainland China to Taiwan’s appetite for QDII inflows, demonstrates regulation, “is welcoming of change, though not necessarily implementing changes blindly”.
This step forward in regulation presents a stronger case for those banks circling the mainland for revenue growth, such as Standard Chartered.
Chinese corporates are setting up distribution and logistics, and increasingly moving cross-border with sales offices being established outside the mainland. Mr Daswani uses the example of Chinese manufacturers winning contracts for infrastructure projects in Africa and the Middle East as, “generating business opportunities for banks like us who are at both ends of the transaction”.
But the flow of new funds in north Asia is not just restricted to Chinese firms and QDII. “Japanese money in India has been a theme for the last five years and a number of joint ventures have been set up, also Korean corporates are starting to base their operations in the region,” he notes.
And with north Asia
