The element that marks a growing concern with regard to restrictiveness relates to the capital of banks. Clearly, the considerations in respect of the need to replenish capital are starting to exert a strong influence on the decisions of banks to grant new credit. This dynamic is worrying. It indicates that the banking system is interpreting the new regulations restrictively for credit. This approach is undesirable and out of line with the objectives so far followed by the economic policy authorities of supporting the financial system, not as an end in itself but as an essential function of savings intermediation. The outcry surrounding the effects that future capital standards and risk management – the so-called “Basel 3” – will have on credit developments in the short term seems unjustified. The new rules are specifically intended to ensure a more orderly and sustainable flow of credit, not a reduction. Moreover, as I said earlier, a gradual process of adaptation to the new requirements is foreseen. The new capital requirements may be attained in two different ways, although they have opposite effects on banking activities: reduction in banking activities, particularly in credit to firms, on the one hand, and capital increase on the other. The alarm that seems to be widespread in the banking sector concerning the new rules seems to mask the intention of adapting to them via a reduced exposure to the real economy, rather than via a capital increase.
With these questions in mind, allow me to now share two strategies in the context of human capital development that, to my mind, are key catalysts toward a new era of development of the banking sector, as well as the broader financial services industry, with a particular focus on our aspiration with regard to the role of ABS towards the attainment of these strategies. First, is the strategic imperative toward professionalising the banking profession to create a banking workforce committed to highest standards of professional conduct, knowledge and competence. Our motivation in pursuing this imperative is many-pronged – firstly, the move to professionalize the industry, to be achieved via the development of professional qualifications and specialised certification track, that can play a vital role in ensuring that the banking workforce consistently achieves high levels of capability through continuing professional development (CPD) and learning. Secondly, by adhering to professional standards, professional conduct and CPD requirements of professional bodies, a higher level of professionalism and behaviour demonstrated by the banking workforce will generate increased public confidence and trustworthiness in the banking sector. Also vitally important, is the objective of creating structured career pathways for banking professionals through qualification and certification, thereby increasing the professional image, stature and attractiveness of the banking sector as a profession. Consequently we should be able to attract the best minds and talents into our mist. The ABS, together with the Asian Institute of Chartered Bankers (AICB), is envisioned to be the catalysts in driving this important agenda of professionalising the industry.