Career Day 2018
Labuan Investment Bank Group
And
Career Opportunities in Investment
Banking
8 December 2018
© Howard Choo V2.0
Presented by
Dato’ Howard Choo, MD & CEO
IBH Investment Bank Limited
Organised by
Labuan IBFC and UMSKAL
Section I
LABUAN INVESTMENT BANK GROUP (LIBG)
INTRODUCTION TO LABUAN INVESTMENT BANK GROUP (LIBG)
Initiated on 8 July 2010 by Labuan FSA approving a Protem Committee comprising:
Chairman : Dato’ Howard Choo (IBH Investment Bank Limited)
Vice Chairman : Mr. Mohsen Hosseini Hossein Pour (Middle East Investment Bank Limited)
Secretary : Puan Zanariah Ja’afar (Amanah Raya Investment Bank Limited)
a) To promote the Federal Territory of Labuan as an International Business Centre.
b) To deal with common issues of concern.
c) To disseminate information of common interest.
d) To communicate and/or liaise with relevant authorities and bodies on all matters affecting the interest of members.
e) Generally to promote and protect the mutual interest of members and to do all such other lawful acts as are incidental
and conducive to the attainment of the above objectives or any of them.
Purpose: To establish a self-regulating body for Labuan Investment Banks.
Objectives
Scope
Membership • All operating Labuan Investment Banks holding a current banking license issued by Labuan FSA.
• Membership is compulsory.
Committee: 3 members from Labuan Investment Banks
Frequency of Meetings a. Committee
At least four (4) times in a year.
b. Labuan FSA
At least twice a year.
a) To receive proposals affecting industry wide practices.
b) To prepare the Committee’s view on such proposals for the attention of the authorities.
c) To administrate industry wide conduct.
d) To undertake any other activities that might promote Labuan FSA or be beneficial to the members.
1-3 © Howard Choo
MEMBERS OF LIBG
0
20
40
60
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
48 44 44 42 41 42 42 43 43 43 41 40 42
8 9 9 9 13 14 15 16 15 14 13 11 12
No.
of B
anks
YearLabuan Banks Labuan Investment Banks
Number of Banks in Operations
No. Bank Incorporation
1 Al-Hidayah Investment Bank 2002
2 City Credit Investment Bank 2002
3 RUSD Investment Bank 2002
4 AmanahRaya Investment Bank 2006
5 Asia Pacific Investment Bank (f.k.a Asia Pacific Development & Investment Ltd) 2008
6 European Credit Investment Bank 2008
7 Middle East Investment Bank 2008
8 Asian Trade Investment Bank 2009
9 IBH Investment Bank 2009
10 PG Asia Investment Bank 2012
11 ACE Investment Bank 2016
12 Blue Investment Bank Inc 2016
13 Baxian Private & Investment Bank 2018
14 Faisal Investment Bank 2018
15 Capital Investment Bank N/A
16 Goldman Sachs Investment Bank N/A
Source: Labuan FSA Annual Report 2017
1-4 © Howard Choo
Typical Investment Bank Business Framework
People
Investment Banking Global Financial Markets
Islamic Banking Financial Services
Equipment Finance
Real Estate Finance
Project Finance
Indo-China & Regional
West Asia
Greater China
Structured Finance
Private Equity
Venture Capital
Fund Management
Mezzanine Financing
Factoring
Capital Markets Corporate Advisory
Derivatives & Futures Trading Commodities Exchanges
Mergers & Acquisition
Regional Specialised Services
1-5 © Howard Choo
Regulatory Framework of Labuan Investment Banks
Labuan Companies Act
1990
Labuan Financial Services
Authority Act 1996
Labuan Financial Services and Securities Act
2010
Labuan Business Activity Tax Act
1990
Anti-Money Laundering and Anti-Terrorism Financing Act
2001
Any other laws relating to
business and financial services
in Labuan
1-6 © Howard Choo
Regulatory Requirements (Non Exhaustive)
Compliance with minimum audit standards.
Maintaining a minimum working fund of MYR 10.0 million or its foreign
currency equivalent.
Compliance with Fit & Proper Person requirement guidelines.
Compliance with Labuan FSA Prudential Guidelines on Banking Business.
Compliance with capital adequacy requirements.
Compliance with timely submission of statistical returns to Labuan FSA.
Compliance with sanctions imposed by UNSC, USA, FATF and other authorities.
Compliance with AML/CFT guidelines.
Compliance with Financial Reporting Standards.
1-7 © Howard Choo
Section II
CAREER OPPORTUNITIES IN BANKING
1-9
…..defined as providing financial products and
services to the general public, to domestic
businesses-big and small, to government agencies,
to international businesses, and to other financial
organisations.
…..also includes the activities of accepting and
safeguarding money from the public.
What is Banking?
© Howard Choo
(Source: AllBankingSolutions.com)
1-10
“banking is a knowledge-intensive, skills
based and relationship-rich industry”…
Quote from a past BNM Governor
“Competence and skills development have
always been an area of focus..”
“..more competitive and more complex…”
What is Banking?
© Howard Choo
1-11
Banking Categories
© Howard Choo
Conventional Banking/Islamic Banking Commercial Banks
Merchant Banks now known as Investment
Banks
Finance Companies now defunct in Malaysia
Offshore Banks Offshore Investment
Banks
Local Banks/Foreign Banks/Regional
Banks/Global Banks
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Commercial Banks = 26*
Finance Companies = 0
Merchant Banks** = 11
Islamic Banks = 16
* Domestic Anchor Banks = 8
Affin Bank/Alliance Bank/AmBank/CIMB/HLBB/Maybank/Public Bank/RHB Bank
** trading as Investment Banks
Malaysian Financial System - Overview
© Howard Choo
(Source: BNM Report 2017)
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Examples
© Howard Choo
CIMB Bank Berhad
Hong Leong Bank Berhad
Citibank Berhad
Standard Chartered Bank Malaysia Berhad
United Overseas Bank (Malaysia) Bhd.
Commercial Banks
Bank Islam Malaysia Berhad
Bank Muamalat Malaysia Berhad
Al Rajhi Banking & Investment Corporation (Malaysia)
Berhad
Kuwait Finance House (Malaysia) Berhad
Hong Leong Islamic Bank Berhad
Islamic Banks
Affin Hwang Investment Bank Berhad
KAF Investment Bank Berhad
Kenanga Investment Bank Berhad
Maybank Investment Bank Berhad
RHB Investment Bank Berhad
Investment Banks
Bank Pembangunan
Bank Rakyat
Bank Simpanan Nasional
EXIM Bank
MIDF
Sabah Development Bank
Bank Pertanian
SME Bank
DFIs – Development Financial Institutions
CIMB Bank (L) Limited
Citibank Malaysia (L) Limited
DBS Ltd., Labuan Branch
Deutsche Bank AG, Labuan Branch
Maybank International (L) Ltd
Offshore Banks
IBH Investment Bank Limited
Al-Hidayah Investment Bank (Labuan) Ltd
City Credit Investment Bank Limited
RUSD Investment Bank Inc.
Asian Trade Investment Bank Ltd.
Offshore Investment Banks
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Financial Master Plan
© Howard Choo
The Financial Sector Masterplan, a
document launched on 1 March 2001, to
chart the future direction for the financial
system over the next 10 years.
Outlines the strategies to achieve a
diversified, effective, efficient and
resilient financial system.
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A Comparison - Labuan & Onshore Investment Bank
© Howard Choo
Criteria Labuan Investment Bank Onshore Investment Bank
1 Scope of Market • International including Malaysia • Only in Malaysia
2 Licence • Comprehensive including Islamic Banking, Fund Management, Capital Markets, lending activities, derivatives market, foreign exchange operations
• Principally in stock broking, domestic debt and capital markets • Require Securities Commission approval for fund management • Restrictions by Bank Negara Malaysia on lending activities
3 Revenue • All activities under Fund Management, Corporate Advisory, lending activities
• Primarily from stock broking
4 Regulator • Labuan Financial Services Authority (Labuan FSA) • Guided by Labuan Financial Services And Securities Act 2010
• Bank Negara Malaysia • Securities Commission • Bursa Malaysia
5 Currency • Can lend in any major currencies except Ringgit • Alternative Ringgit lending is through SBLC (product substitute) giving same effect
• Limited to Ringgit loans only
6 Tax Rate • Pays only 3% profit tax or MYR20,000 as elected annually • Pays Malaysian corporate tax at 25%
7 Customer • Any customer, domestic and foreign, onshore and Labuan • No consumer loans
• Only Malaysian corporates • No consumer loans
8 Ownership • must be FI owned
• All Bank or Institution owned • Merger of stockbrokers and merchant banks • No new licences (Affin, Alliance, AmInvestment, CIMB, ECM Libra, Hong Leong, Hwang- DBS, KAF, Kenanga, Maybank, MIDF Amanah, MIMB, OSK, Public Investment, RHB)
9 Operations • Labuan and KL • JB, if applied for • Any other parts of the world
• Malaysia only • Branches of stock broking firms allowed as branches of the Investment Bank
10 Capital • Minimum MYR10.0 million • IBH Bank’s target is USD100.0 million at holding company level
• Minimum MYR500.0 million
11 Controlling Interests
• No restrictions • changes exceeding 15% notification to LFSA
• Restricted to maximum 20% per shareholder
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A Comparison – Labuan Investment Bank & Malaysian Commercial Bank
© Howard Choo
Criteria Labuan Investment Bank Domestic Commercial Bank
1 Business Focus • Fee income from Advisory, Interest Income from loans, Fund Management Income
• Largely interest income from loans • Money market and treasury products • Trade Finance
2 Market Scope • Global including Malaysia • Domestic market
3 Capital Need • One-off at level predetermined in Business Plan • Continuous need to support Balance Sheet • Basel II capital demand to support risks
4 Capital Utilisation • Efficient as no demand for liquidity and statutory reserves by Central Bank
• Not fully efficient • Unused capital support required for maintaining statutory reserves by Bank Negara Malaysia • Risk-adjusted capital demand
5 Ownership • No restriction • Opportunity in IBH Investment Bank • Offers active participation and management
• Controlled by Bank Negara Malaysia • If purchased in open market, average PE > 20 times which is costly • No controlling interests allowed • Passive investment
6 ROE • Offers higher return on investment due to cost structure • Pure investment banks ROE above 25%
• Market average ROE 16-18% for Malaysian Banks
7 Products • M & A • Corporate loans • SME loans • Foreign Exchange • Fund Management • Derivatives • IPO
• Consumer • Retail and SME • Corporate • Trade • Foreign Exchange and Money Market
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H ead O f f i ce or Branches?
Banking Departments
© Howard Choo
Marketing/ Credit/ Loan
Administration
Risk Management/
Treasury & Markets /
Accounts & Finance
Corporate Communications
/Audit/ Loans Recovery
Consumer Banking/ Corporate Banking/
Enterprise Banking
Private Banking/ HR-
Compensation, Performance,
Training
IT Dept
Legal & Secretarial/ Operations/ Property & Gen Admin
Compliance Dept (AML/CFT
functions)
where would you like?
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the Positives & the Negatives
© Howard Choo
• A life long career – depends on you
• Challenging work environment
• Financial rewards
• Perks and benefits
• Opportunities to understand how businesses operate
• Networking
• Continuous learning experience
• Develop specialised skills
• Exposure to technology
• A chance to travel
What Banking Can Offer?
• Long hours is the trend today
• Need to remain focused all the time
• Demanding customers
• Continuous Professional Development (CPD) required
• High performance culture
• Burn out syndrome
• Minimal error tolerance
• Family life
• Too profit driven
• Maintain high Ethical Standards
Positives
Negatives
Demand
Attributes and Qualities
© Howard Choo
Able to sustain long hours of
work
Honesty and integrity
Reasonable communication
skills
Soft skills and hard skills
Willing to learn and willing to ask
questions
Modest, self motivated and
teamwork
Focused and accurate
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Code of Conduct - A Snapshot
© Howard Choo
• To be honest and righteous and to exercise the highest integrity at all times;
• To be professional in all dealings with staff, clients and other business associates;
• To devote full time to the Bank's work and to promote the Bank's interest at all times;
• To uphold the Bank's name and reputation at all times;
• To excel in work;
• To deliver the highest standard of service;
• To respect the dignity of all jobs;
• To maintain in strictest confidentiality both while they are in the service of the Bank and after leaving the employment of the Bank, all information acquired directly and indirectly in the course of work or by virtue of their position in the Bank. Information should not be disclosed without proper authorisation;
• To avoid, at all times, any conflict of conduct in all undertaking (eg: Approvals required for directorships, related party lending, gifts)
• To abide by all policies, rules and regulations, and other practices laid down from time to time.
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THANK YOU