The Blogger and the Banker.

 

Nazir Razak-Group Chief Executive. CIMB group.

Even since Nazir Razak, the youngest brother of the Razak siblings came out with his 'bastardised' NEP shocker, I had wanted to meet him. The opportunity came on the 28^th December. I did some background reading.

My motive in meeting him up is to allow me later to portray Nazir Razak as the thinking banker that he is. I find I am in agreement for most part about the whole affair with this NEP thing, special rights and so forth.

I am not going to elaborate on his area of expertise- others have done that copiously elsewhere. My understanding of the banking industry does not extend beyond using the ATM card and check book.

He has attained many accolades which he rightly deserved. I mean as a Malaysian Malay, it's a nice feeling to see his name being mentioned other than hearing the name of boss of Public bank.

When I say he is a thinking banker- I meant it in the sense that his ideas and the things he speaks about, are beyond the topics talked about by a conventional banker. He has 'invaded' areas typically played and preyed on by politicians and social thinkers. The statement about the NEP, the AP issue, and good governance are not normally topics of technical banking.

But I also hope he knows he is also entering a no man's land. Choosing to speak on the matters he did, opens him up for criticisms. Ibrahim Ali for example, representing what's taken as the purest of Malay ideals, struck out at Nazir. He asked Nazir to learn from the 'greats' such as Dr Mahathir and Tengku Razaleigh. These two people speak, claimed Ibrahim from a jiwa dan roh Melayu. The closest translation that I can think of is- being and the spirit of Malay. By that classification, in Ibrahim's books, Nazir Razak isn't quite in 'being and spirit' a Malay.

Who then is Nazir Razak? What is he?

As many of you know, he is the youngest son of Tun Razak. When Tun Razak died, we remember his picture in a classroom with his cousin, a son of Tun Hussein Onn. He went to study at the University of Bristol and then went to read for a master's degree at Cambridge. He worked his way in the banking industry and he is where he is today. His rise is the result of many factors and which one, depends on anyone's inclination to insist on. I will leave it at that.

But I suspect, his meteoric rise to a certain extent, has to do with the father's name. I would however readily concede that his rise to a larger extent has also been due to his merits.

So I made my way to the 10^th Floor of the CIMB headquarters. I was ushered into what appeared to be the floor's meeting room and waited for him. In the meantime, I went through my scribbled doctors handwritten notes readying myself.

We exchanged some initial small talk. In attendance was also Mr. J.Pang, McKinsey alumnus and graduate from Stanford. I was in formidable company.

I must caution readers however, the views I interpreted as that coming from Nazir Razak may not be as he intends them to be. Any misinterpretation is entirely mine.

 

The meeting: Part 1

NR: I see you have reinvented yourself as a blogger.

S47: Indeed I have.

NR: Does the PM read your material?

S47: I hope he does. I am UMNO man but consider myself as the resident dissenter and perennial busy body.

NR: I believe he is selective if he does read at all.

S47: Yes, and that would also very much depend of whether my material can get pass his phalanx of advisors.

NR: do you do this being sponsored by some people?

S47: I do this as a labor of love. That gives the space to write.

NR: Yes- I think if he reads some of the material you wrote, he won't want to see you again.

We all let out laughs.

 

Here are some of the issues.

When I asked Nazir Razak, the boss of CIMB, how he views the issuance of new banking licenses, his answer was perhaps a tad standard issue. Before I met him, I listened to his several interviews. One was with World Business where the talk involved basically the banking industry.

Nazir Razak has this idea that the banking industry needs to be rationalized. The way to go is for mergers. We now have 9 large banks, operating in Malaysia. We must fewer larger banks to leverage on the economies of scale.

Perhaps he was thinking about the licenses issued to 5 foreign banks to operate. He sees no contradiction to what he said at the interview. These are intended for some specific purposes- niche areas.

In so far as these banks operate in niche areas- green technology and that all that esoteric stuff, these banks will not compete with local banks. That means, these banks are allowed to operate on highly regulated areas so that they won't pose a danger.

BNM has come out with they termed as stringent and strict measures. The banks need a capital of USD 1 billion, its management must consist of top quality material. You would think, these are requirements for wagyu beef or something.

In reality then, there wasn't financial liberalization in a strict sense. What you have is a managed regime of specific sectorial banking participation. I mean this is something similar to "you can have any color as long as it's black" for the banking industry.

But actually I was looking at his answer and take on the coming issuance of banking licenses to 2 cooperatives. Angkasa and one other cooperative. The capital requirement is way much smaller and the rationale for asking for licenses can always be thought of by some smart cookies.

Will the issuance of banking licenses to these two coops open the floodgates to more in future? This isn't the wagyu beef variety but more of garden stuff where, such approvals can be used by others to gain banking licenses. The government will be hard-pressed to justify why in the case of these 2 coops, licenses can be issued. You can then have a coop specifically attending to the Indian community coming to the government asking for banking licenses. The Chinese fisherman in Teluk Intan will want to apply for banking license to take care of the sizeable number of Chinese fishermen in the west coast. Or that Nikmat, the fisherman coop can also ask for a banking license to take care of its fishermen members.